TABLE OF CONTENTS:
1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS
1.1 Israel to Sell-Off 49% of Israel Post Company
1.2 New Tourism Minister Supports Casino in Israel
2: ISRAEL MARKET & BUSINESS NEWS
2.1 Ten Israeli Companies in “Red Herring” Top 100 Start-Ups
2.2 Acro Announces European Launch of ACRO-P.E.T. – Revolutionary Peroxide Explosive Tester
2.3 Pixer & Marketech Sign a Representative Agreement
2.4 $44.4 Million loss for El Al in 2006
2.5 Magnum Venture Capital Changes Name to Magma Venture Partners
2.6 Frutarom Acquires the Flavors Company Belmay
2.7 EBRD to Finance 5 Israeli Projects in Eastern Europe
2.8 Clarizen Recognized as Red Herring 100 Europe Finalist
2.9 Tevet Awarded ISO 9001 Certification, Expands Supply Chain
3: REGIONAL PRIVATE SECTOR NEWS
3.1 Intura Solutions Expands in Middle East With EMPA Business Solutions
3.2 Gulf Air Contributes $770 Million to Bahrain GDP
3.3 Dubai Woodshow 2007 Deals Top $50 Million
3.4 Redline's WiMAX Network to Be Deployed by Saudi Telecom Company
3.5 Burger King to Expand in Egypt
3.6 Pakistan Selects Telcordia for Mobile Number Portability
3.7 Verso to Provide MetroNet VoIP Overlay Solution to MyTel of Pakistan
3.8 Current Technology Reports Further Sales to Turkey
3.9 Scotiabank Continues Global Expansion, Opens Representative Office in Turkey
4.1 Bank of Israel Reports Poverty is Declining
4.2 Shamrock Starting New Israel Fund With $250 Million
4.3 Dor Alon to Invest $2.5 Million In Recycling Fuel Vapor
5: ARAB STATE & PAKISTANI DEVELOPMENTS
5.1 Air Traffic to Arab World Grows by 7%
5.2 Jordan Plans Nuclear Energy by 2015
5.3 Jordan Ranks 1st in Education at Arab Level
5.4 Kuwait Income Hits $50 Billion
5.5 $625 Million Kuwait Oil Company Deal for New Plant
5.6 UAE Considering Monetary Revaluation
5.7 Abu Dhabi to Build Free Trade Zone
5.8 Dubai's Iron & Steel Trade Rises by 32.5%
5.9 Saudi Spending To Reach $116 Billion
5.10 Saudi Arabia to Drive Broadband Subscriptions Up
5.11 Libya Plans Ambitious Tourism Makeover; Predicts Free Zones Will Spur Investment
5.12 Musharraf Says Economic Gains Provide Foundation for Continued Growth
5.13 Pakistan's Trade Deficit Projections Expanded To $13.4 Billion
6: TURKISH & CYPRIOT DEVELOPMENTS:
6.1 Pipeline to Pump $1 Billion Into Turkish Coffers
6.2 Turkey Invites Investors to Offshore Drilling
6.3 Cypriot Renewable Energy Use Set To Double
*ISRAEL:
7.1 Holocaust Martyrs' & Heroes' Remembrance Day 2007
*REGIONAL:
7.2 Mustache Goes a Long Way to Create Awareness in Turkey
7.3 Turkey Achieves Guinness Record for World's Longest Cake
7.4 Turkey's First Gay & Lesbians Students Club Established At Bilgi University
8.1 BioLineRx In-Licenses Novel Peptide for the Treatment of Inflammatory Diseases
8.2 BrainsGate Named a Winner of the Red Herring 100 Europe Award
8.3 TransPharma Medical Named Winner of 2007 Red Herring 100 Europe Award
8.4 Procognia Enters Protein Kinase Array Collaboration With GSK
8.5 BioLineRx In-Licenses Two Additional Drug Candidates
8.6 NasVax Announces Successful Completion of Another Pre-Clinical Trial
Back to top
9: ISRAEL PRODUCT & TECHNOLOGY NEWS
9.1 Civcom Expands Its M-DCM Line to Offer Complete Solution from Modules to Subsystems
9.2 RADVISION SIP Server Platform Enables Secured Internet Voice Services Solution for Enterprises
9.3 IncrediMail Receives iParenting Media Award
9.4 Siemens Selects NICE Video Content Analysis Solution to Enhance Belgian Railways' Security
9.5 Alvarion Addressing Widespread Demand for 802.16e-Based Solutions
9.6 ioimage Releases All-in-One Intelligent IP PTZ Video Security Camera With Autonomous Tracking
9.7 Digitel GSM Places First Time Order for ECtel's Integrated Revenue Management Solutions
9.8 UltraShape CONTOUR I Named 'Product of the Year' by Ultrasonic Industry Association
9.9 RADVISION's Innovative Video Applications Running on SCOPIA Interactive Video Platform
9.10 Discretix Multi-Scheme DRM Client on TI's M-Shield Mobile Security Platform
9.11 New Mellanox ConnectX IB Adapters Unleash Multi-core Processor Performance
9.12 MobiMate's WorldMate i10 Revolutionizes Travel Services for Frequent Fliers
9.13 ECI Telecom First to Announce Integration of IMS Architectural Elements into Access Node
9.14 Orca Interactive Launches Triple Play Services with Greek IPTV Pioneer ON Telecoms
9.15 RC & Runcom Complete Development of Mobile WiMAX Base Station and User Terminal
9.16 emoze Launches First-Ever Free Global Service for Push Email Without Server Side Software
9.17 RADCOM Debuts QTrace for 3G Mobile Network Operators
9.18 fring Rings in Mobile VoIP Freedom of Choice
9.19 VocalTec Receives Significant Purchase Orders From Deutsche Telekom
9.20 IPTV System From Optibase Helps Humberside Police Fight Crime
9.21 OnSSI & Agent Vi Provide a Powerful Solution for IP Video Surveillance
9.22 Gilat Provides Broadband Satellite Network With More Than 3,000 Sites for Major European Retail Chain
10: ISRAEL ECONOMIC STATISTICS
10.1 State of Economy Index Rises By 0.3% in February
10.2 Israel's Exports Increased by an Annualized 6.7% in December-February
10.3 Israel's Foreign Debt Falls 53% to Record Low
10.4 Israel's Terms of Trade Improve
10.5 Eilat Expects 30,000 Visitors for Passover
10.6 Israel's Private Consumption Still Growing
11.1 Israel: Testing the Speed Limit
11.2 Jordan: 2006 Article IV Consultation and Fourth Post-Program Monitoring Discussions
11.3 Construction Leads Jordan's Economic Growth In 2006
11.4 Kuwait: Aston Martin Sold To Kuwaiti Investment Companies
11.5 Bahrain: Revitalizing the Energy Sector
11.6 Dubai: A New Theme Park
11.7 Egypt: When a Prime Minister Makes Monetary Policy
11.8 Libya: Privatization Possibilities
11.9 S&P Raises Cyprus Outlook to Positive
1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS
1.1 Israel to Sell-Off 49% of Israel Post Company
The privatization of the postal service has taken a further step forward. Sources inform 'Globes' that under a proposal drawn up by Government Companies Director Gabbai, the state will sell up to 49% of Israel Post Company through a share offering to be held on the TASE by May 31. The proposal, which was drawn up by the Government Companies Authority's privatization unit, was submitted for review at the beginning of the week to the following government authorities for their consideration, ahead of a meeting of the cabinet privatization select committee: The Ministry of Communications, Attorney General Mazuz, the Ministry of Finance Budget Department and Accountant General, and the General Security Service (GSS). The proposal also provides that part of the capital raised in the offer for sale of the state's holdings will be injected into the company. The Ministry of Finance is keeping all its options open, and has ruled that the first stage of the offering will be transacted through a prospectus or alternatively, a private placement of shares or bonds to an Israeli or a foreign investor. Last September, the government approved a resolution that set out the guidelines for the privatization of Israel Post. At the first stage, part of the company will be issued to the public on the TASE, with the state retaining its controlling interest. This will be followed by the private sale of the remaining holdings to a strategic investor. As a result of internal disagreements at the Ministry of Finance, it was decided that the Government Companies Authority would carry out the privatization, and not the Accountant General. (Globes 22.03)
1.2 New Tourism Minister Supports Casino in Israel
Minister of Tourism Aharonovitch, who took up his post last week, supports opening a casino to create jobs. He also sees it as a way to give Israelis an alternative to going to casinos in Cyprus and Bulgaria. Aharonovitch is a former Israel Police deputy commissioner. He also supports open skies and cutting air fares as much as possible. Aharonovitch said that he also supports setting up a marketing authority together with tourism companies. He said this authority would be a professional body that would decide on targets and concentrate on achieving them. He added that he does not support turning the Ministry of Tourism into a government agency, as has been proposed more than once, including by the Ministry of Finance. He said that no ministry would take responsibility for a tourism agency, especially the very busy Prime Minister's Office. (Globes01.04)
2: ISRAEL MARKET & BUSINESS NEWS
2.1 Ten Israeli Companies in “Red Herring” Top 100 Start-Ups
Ten Israeli start-ups made the “Red Herring” 2007 Europe 100 list. The UK had the largest number of promising start-ups, with 24; followed by Germany (14), France (13) and Israel. Next are Switzerland (7), the Netherlands (5), and Ireland (4). Four of the ten Israeli companies are in the life sciences, three in communications, and one each in cleantech, information security and hardware. They are as follows:
* Alga Technologies (http://www.algatech.com) develops Astaxanthin and other microalgae-derived products for the nutraceuticals and cosmeceuticals industry.
* Amimon (http://www.amimon.com), which is developing a wireless high-speed video-modem connectivity solution
* Atlantium (http://www.atlantium.com), which designs and produces water purification systems
* BrainsGate (http://www.brainstorm-cell.com), which is developing an electrical stimulation device for opening arteries to the brain to treat ischemic stroke, and deliver drugs to the central nervous system, overcoming the blood-brain barrier.
* Dyuna Blue (http://www.dyuna.com), which is developing a platform for sending content via cellular telephones.
* Fring (http://www.fring.com), which has developed VoIP calls, instant messaging and other applications for mobile phones.
* InSightec Image Guided Treatment (http://www.insightec.com), which is developing non-invasive treatments for non-malignant tumors in the womb using focused ultrasound.
* Lumus (http://www.lumus-optical.com), which is developing innovative screens for cellular devices.
* TransPharma Medical (http://www.transpharma-medical.com), which has developed a transdermal drug-delivery system for large molecules.
* Yoggie Security Systems (http://www.yoggie.com), which is developing IT security systems for mobile devices.
Six months ago, Amimon and BrainsGate won the “Red Herring” awards for promising Israeli start-ups, together with Zend Technologies, which was not included in the 2007 Europe 100 list. (Globes 22.03)
2.2 Acro Announces European Launch of ACRO-P.E.T. – Revolutionary Peroxide Explosive Tester
Acro announced the European launch of ACRO-P.E.T., the company's innovative patented peroxide explosive tester. ACRO-P.E.T is being demonstrated by KeTech Defense at the HOSDB 2007 Exhibition – the UK's premier showcase for the latest security equipment. ACRO-P.E.T. is able to identify peroxide based explosives, such as Triacetone Triperoxide (TATP), which may appear in a variety of shapes and forms, including liquid explosives. Caesarea, Israel's Acro (http://www.acrosec.com) develops explosives detection technologies. The company developed a unique patented technology for identifying peroxide based explosives, such as TATP. (Acro21.03)
2.3 Pixer & Marketech Sign a Representative Agreement
Pixer Technology and Marketech International Corporation (MIC) announced they have signed a representative agreement. Under this agreement, Marketech will sell the Pixer Critical Dimension Control (CDC) tools of Pixer to semiconductor and mask manufacturers in Taiwan, China and Singapore. CDC101 is an industry-first solution for CDC, improving global and local CDU across masks and wafers. CDC101 modifies the mask transmission in order to modify and correct the CD on the wafer resist. Deep UV transmittance of the mask is selectively and locally altered by partially scattering shading elements (Shade-In Element) inside the quartz. This creates local pixels with a different refractive index relative to the quartz. An array of such pixels with a constant density constitutes one shading element. Optical CD systems, CD SEM or reticle AIMSTM predetermine the required corrections. Carmiel, Israel's Pixer (http://www.pixertech.com) is a supplier of semiconductor capital equipment based in Karmiel, Israel. The company provides IC manufacturers and mask makers with solutions to correct, improve, and selectively optimize the photolithography masks that are used to imprint an IC design onto wafers in the manufacturing process. Pixer develops and manufactures highly integrated systems based on its innovative optical laser technologies. Applying its Shade-In Element technology, Pixer offers a unique solution for the uniformity of Critical Dimensions, addressing the industry's requirements for advanced processes at or below 65 nanometers. (Pixer21.03)
2.4 $44.4 Million loss for El Al in 2006
El Al Israel Airlines published its financial report for Q4/06. El Al ended 2006 with a loss of $44.4m. Sales rose 3% to $1.66b in 2006, while cash flow from current operations totaled $73.3m. The airline attributed the results to a number of factors, first of which was the increasing competition in the market (following the introduction of the "open skies" policy), which led to a 21% increase in available seats on scheduled flights, while incoming traffic to Ben Gurion Airport rose by just 6%. The airline also noted that, in contrast to other companies, the second Lebanon war caused substantial harm to its results for Q3, the most important of the year for tourist traffic. It also said that it had been hurt by changes in oil prices, although this had been offset by financial hedges. El Al posted a loss of $18.6m for Q4/06, compared with a profit of $1.7m in the preceding quarter. This accounted for 40% of the airline's loss for the full-year. Fourth quarter revenues totaled $417m, 6% less than in the preceding quarter. (ElAl22.03)
2.5 Magnum Venture Capital Changes Name to Magma Venture Partners
Magnum Venture Capital Fund, which specializes in Early Stage investments in Israeli related communications and semiconductor companies announces the changing of its name as of today to "Magma Venture Partners." The company is also changing its logo scheme to reflect its new name and continued vision. The name change to Magma Venture Partners comes as a result of other funds possessing the Magnum brand and is in line with the closing of the General Partner's second fund – Magma II. Magnum believes that Israel will continue to be a leading center for the development of communications and semiconductor technology in the coming years. As a leading investment fund focused in this field, Magnum plan to continue invest in outstanding, innovative companies. The communications and semiconductor field, in its broad sense, represents 50 to 60% of technological investments in Israel. Magma Venture Partners, by means of its four partners, has extensive experience in the communication industry as well as venture capital investment and is proud of its ability to nurture ideas from early-stage concepts to well-developed companies, each leading in its domain. Magma Venture Partners (http://www.magmavc.com) is a venture capital fund specializing in Early Stage investments in the Israeli related communications and semiconductor industry, the largest sector within technological investments in Israel. (MVC21.03)
2.6 Frutarom Acquires the Flavors Company Belmay
Frutarom Industries signed an agreement to acquire 100% of the share capital of the British company Belmay Limited, which has subsidiaries in Singapore, Norway and Denmark, in consideration for a cash payment of $ 17.1m. Belmay's sales for 2006 totaled to approximately $ 15.1m. Belmay is a leading British flavor house that develops, produces and markets flavors, with a particular focus on natural flavors, for the food and beverage industry. Belmay has a site with significant production capacity that is located close to Frutarom's production site in Kettering, England, which adheres to the most stringent standards in the food and beverage industry in Europe. This acquisition, which is an additional step in the implementation of Frutarom's rapid growth strategy and of realizing its vision, is an important strategic acquisition that makes Frutarom the leading flavor house in the British market and enhances its presence and position in additional important target markets. The acquisition is expected to significantly strengthen the Frutarom's research and development capabilities in the field of flavors, mainly for soft drinks and alcoholic beverages, with emphasis on natural flavors. Haifa, Israel's Frutarom (http://www.frutarom.com) is a global company with significant production and development centers on three continents that markets its products on five continents to over 5,000 customers in more than 120 countries. Frutarom's products are intended mainly for the food, beverage, flavor, fragrance, pharmaceutical, nutraceutical, health food, functional food, food additives, and cosmetic industries. (Frutarom28.03)
2.7 EBRD to Finance 5 Israeli Projects in Eastern Europe
The European Bank for Reconstruction and Development (EBRD) has signed five financing contracts, worth an aggregate $300m, for projects for Israeli projects in Eastern Europe. The EBRD has also initiated a syndicate with Bank Hapoalim, Bank Leumi and Mizrahi Tefahot Bank to finance projects in Romania, Russia and Ukraine. The EBRD will participate in the financing of a Tnuva Food Industries project in Romania, an IDI Israel Direct Insurance venture in Russia and real estate projects of Fishman Holdings in Russia, BSR Europe and Kardan. The Bank of Israel said the partnerships between the EBRD and Israeli companies would reduce the political and financial risks for the companies in the projects in Eastern European and CIS countries. Partnership with the EBRD will make it easier for the companies to obtain financing from international commercial banks. (Globes 28.03)
2.8 Clarizen Recognized as Red Herring 100 Europe Finalist
Clarizen, developer of a collaborative, enterprise-grade project management solution for businesses of all sizes, has been selected as a Red Herring 100 Europe finalist by the publication's editorial board. The Red Herring editorial board selected the 200 finalist companies from over 700 applicants after diligent survey of innovative, entrepreneurial companies. Clarizen's collaborative project management solution is already being tested by users from dozens of companies worldwide who have joined the company's design partners program. Clarizen will launch the public Beta of its project management service in mid-2007. Businesses may register to join Clarizen's Beta service or apply to become a design partner at the company's website: http://www.clarizen.com. Headquartered in Kfar Saba, Israel, Clarizen enables on-demand, enterprise-grade project management for every business. Active participation and secure cooperation deliver true team collaboration, while up-to-the-minute live knowledge helps align project data with business objectives. These unique benefits are derived through Software as a Service (SaaS) – which requires no software and no dedicated hardware – and Web 2.0 freedom of communication. (Clarizen28.03)
2.9 Tevet Awarded ISO 9001 Certification, Expands Supply Chain
Integrated metrology supplier Tevet Process Control Technologies today announced it has been awarded ISO 9001: 2000 Certification. The ISO 9001 Certification comes as part of a two-year program to enlarge facilities, add manufacturing capacity, and expand support capabilities to meet Tevet's more than 4X growth in CVD integrated metrology installed base. Tevet's quality management system was audited and found to be in compliance with the requirements of ISO 9001: 2000 for design, development, manufacturing and service of process control systems by IQNet and the Standards Institute of Israel. ISO 9001: 2000 has gained worldwide acceptance as the comprehensive standard for quality management systems and is subject to periodic surveillance audits to ensure continuous maintenance and improvement of the quality system. Two years ago Tevet began a business expansion to address the rapidly growing worldwide demand for Tevet's integrated metrology products in the semiconductor marketplace. Starting with the relocation to a larger facility announced two years ago, Tevet increased its business capacity and volume scalability while holding fixed costs at near pre-expansion levels. Tevet fully qualified multiple outsourcing suppliers (all ISO 9001 Certified), increased regional coverage and depth of its international distributor and representative network, and built an experienced management team. Yokneam, Israel's Tevet Process Control Technologies (http://www.tevet-pct.com) serves the semiconductor industry with unique integrated metrology solutions for critical process control challenges. Supporting customers worldwide, Tevet develops its technology and products in its headquarters in Israel and provides sales, marketing and technical support through its US offices. (Tevet29.03)
3: REGIONAL PRIVATE SECTOR NEWS
3.1 Intura Solutions Expands in Middle East With EMPA Business Solutions
Dallas, Texas' Intura Solutions, a leading supplier of point-of-sale (POS) and business management software for quick service, fast casual and delivery restaurant concepts, announced that it has signed a distribution agreement with EMPA Business Solutions (EMPA-BS) to offer Intura's line of software products in Saudi Arabia, U.A.E, Jordan, Oman, Yemen, Bahrain, Kuwait, and Qatar. Through this agreement, EMPA-BS will have distribution license rights to Intura Vision and Intura Enterprise, a corporate communications portal and data warehouse for multi-unit restaurant organizations. EMPA-BS will provide hardware, installation, training and support services, while maintaining the customer relationship that has built their reputation over the years. EMPA Business Solutions, established in 1998, Jebel Ali Free Zone, Dubai, UAE is one of the leading regional IT distributors in the Middle East. (Intura Solutions 22.03)
3.2 Gulf Air Contributes $770 Million to Bahrain GDP
Gulf Air contributes $770m every year to Bahrain's Gross Domestic Product and carries around 1.1 million tourists, the airline announced. Bahrain's exports on Gulf Air cargo jets also top 4,100 tons, contributing $60m to the kingdom's GDP. The carrier contributes an annual direct $246m to the national economy, in addition to an indirect $153m. The company also employs 4,538 people, plus 3,600 other indirect workers. Gulf Air operations amount to 70% of Bahrain International Airport activities. Restructuring, ensure a return to profitability, would include the volume of revenues, flights, jets maintenance operations, in addition to finalizing pending legal, financial and procedural issues. The program aims to enable the company to regain the status that reflects its long march in the realm of civil aviation. (TradeArabia 20.03)
3.3 Dubai Woodshow 2007 Deals Top $50 Million
Strategic Marketing & Exhibitions, organizers of the recent Dubai Woodshow 2007, announced a total of $50m in deals closed. The second edition, which had grown by 118% hosted 115 leading local and international companies, was visited by over 3,500 visitors from across the Middle East, Africa and Europe. Leading regional and international companies closed out sizeable contracts over the course of Dubai Woodshow 2007 and have committed to a larger presence at the next edition, which will run from February 5 – 7, 2008. The participation of local and international exhibitors was enhanced by the American Hardwood National pavilion, debuting to join Canada, China, Italy Germany, Brazil and Spain as well as leading international associations like the European Federation of Woodworking Machinery Manufacturers (Eumabois), Asociacion de Fabricantes Espanoles de Macquinaria (AFEMMA), American Hardwood Export Council (AHEC) and Czech Woodworking Machinery Manufacturers Association (SVDSZ). Visitors to the American pavilion, which comprised of 10 collaborating companies under the umbrella of AHEC, were introduced to American hardwood products. These products, which have a solid reputation in the rest of the world, drew considerable interest from industry representatives who were keen to learn more. The Pennsylvania Hardwoods Development Council was represented in the AHEC pavilion by its Hardwoods Development Specialist and the Commonwealth of Pennsylvania's Eastern Mediterranean Regional representative. Close to 100 new leads were developed for PA hardwood manufacturers and several orders have already been placed. Pennsylvania is represented in the region by Atid, EDI. (Al Bawaba 28.03)
3.4 Redline's WiMAX Network to Be Deployed by Saudi Telecom Company
Markham, Ontario's Redline Communications, a leading provider of standards-based WiMAX and broadband wireless infrastructure products, announced Saudi Telecom Company (STC) has chosen Redline's RedMAX WiMAX Forum Certified products for its nation-wide WiMAX network in Saudi Arabia. STC, the country's national telecommunications operator, has deployed RedMAX products in Riyadh, Jeddah and Dammam as part of the first phase of its WiMAX network deployment. Redline's WiMAX products deliver the performance required to operate a full scale WiMAX network in any environment. Using TDD (time division duplexing), RedMAX ensures a high degree of spectral efficiency even in dense urban environments. (Redline26.03)
3.5 Burger King to Expand in Egypt
Burger King Corporation announced that its subsidiary, Burger King Europe GmbH, has signed a development agreement with Hana International Company, a subsidiary of Olayan Financing Company, the Saudi and Middle Eastern arm of The Olayan Group. The agreement gives Hana the exclusive right to develop the Burger King brand in Egypt and other North African countries. The opening of the first Burger King restaurant will take place during H1/07, at Egypt's City Stars Mall, Cairo, one of the largest shopping malls in the region. Two further openings are due to follow shortly in Sharm El Sheikh, signaling the beginning of a large expansion program over the next five years. To accelerate the development of the brand in new and existing markets, Olayan has signed an agreement with a strategic partner, the Kuwaiti Al-Shaya group, through the formation of a joint venture. Burger King Corporation signed its first development agreement with Olayan in 1991. Through Hana International, Olayan now operates or services more than 180 Burger King restaurants throughout the Middle East including Saudi Arabia, the UAE, Kuwait, Jordan, Bahrain, Qatar and Lebanon, and is the largest Burger King franchisee in the region. Its highly experienced international management team has helped foster four consecutive years of double-digit growth. (Burger King29.03)
3.6 Pakistan Selects Telcordia for Mobile Number Portability
Pakistani residents will soon have more choice, thanks to the number portability contract between Piscataway, NJ's Telcordia and Pakistan MNP Database (Guarantee) Limited (PMD), the company set up by the mobile operators with the specific purpose of facilitating the implementation of mobile number portability (MNP). PMD will be using the Telcordia Number Portability Clearinghouse solution as the centralized repository for number porting. The Telcordia solution will enable Pakistani residents to easily switch providers without the time and expense of changing phone numbers and offers service providers exciting, new opportunities to add customers and boost revenue. MNP has been implemented on March 23, 2007, the National Day of Pakistan. Telcordia Technologies is a leading global provider of telecommunications network software and services for IP, wireline, wireless, and cable. As the industry continuously evolves, Telcordia has the experience and reach to deliver the critical elements of success to help communication providers worldwide deploy innovative and profitable new services via any network or device while helping carriers aggressively reduce costs and grow revenues. (Telcordia23.03)
3.7 Verso to Provide MetroNet VoIP Overlay Solution to MyTel of Pakistan
Atlanta, Georgia's Verso Technologies, a global provider of next generation network solutions, along with regional partner Al-Futtaim Technologies (AFTECH) and local partner Northtech (Pvt) Ltd, announced that it has been selected by MyTel of Pakistan to provide the Verso MetroNet VoIP Overlay solution, including the Verso Back Office Solution (VBO), an integrated back office application that supports network administration, provisioning and billing, all riding over a WiMAX network infrastructure. Verso offers providers entering the wireless WiMAX arena voice communications and services including VoIP, prepaid, IP Centrex and voicemail and more. The MetroNet VoIP Overlay solution, which runs over both wireless and WiMAX networks, integrates and packages a standard set of VoIP features and capabilities which includes Verso Clarent Class-5 and Class-4 switching technologies, as well as other core capabilities and services including an optional VBO component that supports in the management of the solution. (Verso29.03)
3.8 Current Technology Reports Further Sales to Turkey
Vancouver, British Columbia's Current Technology Corporation announced its exclusive distributor in the Republic of Turkey, Sanomed Medikal Teknoloji Co., has purchased three more ElectroTrichoGenesis (ETG) devices. The ETG devices will be delivered to the offices of three dermatologists in early April. The end of March marked the close of Sanomed's first year as CTC's exclusive distributor, during which time they has purchased and taken delivery of 12 ETGs. Current Technology Corporation remains committed to developing its non-invasive pulsed electro-stimulation technology. This technology has enabled the Company to develop two separate and distinct products emanating from the TrichoGenesis platform, thus far, that offer help for those concerned with their hair: ElectroTrichoGenesis (ETG) and CosmeticTrichoGenesis (CTG). (CTC22.03)
3.9 Scotiabank Continues Global Expansion, Opens Representative Office in Turkey
Toronto, Ontario's Scotiabank announced that the Bank is expanding its global banking network through the launch of a representative office in Turkey, a gateway to Europe, Asia, the Middle East and Africa. With a representative office in Istanbul, the Bank will expand its established trade finance, syndicated loans and correspondent banking businesses across the region. A representative office in Turkey will also facilitate the penetration of other Scotiabank business lines, such as Scotia Mocatta and Scotia Waterous. ScotiaMocatta is a global leader in precious metals trading and finance. Scotia Waterous is a leading global oil and gas mergers and acquisitions firm. Both of these units are a part of Scotia Capital, the Bank's global wholesale banking division. Turkey, Eastern Europe and the Commonwealth of Independent States (CIS) – including Russia, Kazakhstan and the Ukraine – are currently served by Scotiabank offices in Toronto managing trade finance opportunities, and Scotia Mocatta, in London, England, offering precious metals services. With a population of more than 70 million, Turkey is among the fastest-growing economies in the world, with GDP growth rates reaching 9.9% in 2004, 7.6 in 2005 and 6.3% in 2006. Scotiabank is one of North America's premier financial institutions and Canada's most international bank. (Scotiabank28.03)
4: ISRAEL MACRO-DEVELOPMENTS
4.1 Bank of Israel Reports Poverty is Declining
The Bank of Israel states that poverty in Israel declined in 2006 after rising in the three preceding years. Initial excerpts of the Bank's "Issues in Welfare Policy" from its 2006 Annual Report found poverty among individuals, as measured by the relative index customarily used in Israel, rose in 2005 to 24.7%, but fell to 24.4% in the year to June 2006. Alternative poverty indices, which reflect the ability to purchase a basket of essential goods or a fixed basket, show a fall in poverty in 2005, after rising for the three preceding years. 40% of the poor managed to consume more than the amount indicated by the poverty line. However the high incidence of poverty over the years makes it difficult for the weaker sections of the population to maintain a reasonable standard of living, so that the level of consumption of 60% of the poor, as well as their income level, is below the poverty line.
The Bank said that the incidence of poverty is particularly high among Arabs, and especially among the Bedouin (66.4% poverty) and the ultra-orthodox (Haredim). The Arab and ultra-orthodox populations constitute 60% of all the poor, a rate that has grown significantly over the years. The rise in poverty among these groups accounts for most of the change in the incidence of poverty in general. Poverty among the weaker populations grew mostly due to the comprehensive cutbacks in transfer payments from 2002 – as these groups are heavily dependent on welfare payments – and a fall in their participation in the labor market. In some of the weaker groups, however, for example those with low levels of schooling, their participation in the labor market increased slightly at the end of the period. The Bank added that child poverty, as measured by the relative indices, rose by 2% in 2005 to an unprecedented 35.2%, which is high also by international comparison. The high rate of child poverty not only harms the children's current standard of living, but also adversely affects the creation of human capital, which is important for future earning power. (BoI28.03)
4.2 Shamrock Starting New Israel Fund With $250 Million
Shamrock Holdings, the Disney family's investment arm, is reportedly putting together a quarter billion-dollar investment fund that targets Israel exclusively. The fund will be established within a year, after Shamrock completes investing the monies in its present fund, say capital market sources. Shamrock began investing in Israel in the mid-1980s and has put about half a billion dollars into Israeli companies since then. The fund operates as a private equity investor, mostly in industrial firms with an export bias. A number of Shamrock's holdings, such as Koor and Tadiran Communications, have been sold off with particularly high profits. Two and a half years ago Shamrock established another fund for continued investments in Israel, with $125m. It has already invested half of this sum in Teva Naot, Kaman Trade, Orad and other companies and is negotiating toward additional investments, particularly in kibbutz-owned industries. It is thought that the remaining funds will be invested within a year. Shamrock held an investor's meeting in Israel recently, attended by many senior executives and investors from Israel and abroad – though it refused to publish the names of most of those attending. (Marker25.03)
4.3 Dor Alon to Invest $2.5 Million In Recycling Fuel Vapor
Dor Alon Energy in Israel is to invest $2.5m to install systems for recycling fuel vapor at 50 municipal gas stations. The system absorbs fuel vapors emitted during fueling, and returns them to the gas station's fuel tanks, thereby preventing polluting the air. The first system will be installed at a gas station near a residential neighborhood in Petah Tikva. Dor Alon president Wiessman said the company decided to install the systems even though Israeli standards do not require them. Europe and the US have mandated such systems for many years. (Globes 25.03)
5: ARAB STATE & PAKISTANI DEVELOPMENTS
5.1 Air Traffic to Arab World Grows by 7%
Air passenger traffic between the Arab World and other regions grew by 7% this past January compared to January 2006, reflecting an increase in passenger traffic with all the world regions. In contrast, passenger traffic inside the Arab World decreased by 10.8% compared to January 2006, according to the most recent statistics from the Arab Air Carriers Organization (AACO). The decrease in passenger traffic inside the Arab World is a result of a decline in passenger traffic within the Arabian Peninsula and within the Near East by 13.3% and 8.6% respectively. Passenger traffic between the Arabian Peninsula and the Near East declined by 11.7% in the same period. Passenger traffic in the Arab World marked a growth of 0.7% in January 2007 compared to January 2006. This follows a growth of 15.5% in December 2006 compared to December 2005. Passenger traffic in the Arab World has fluctuated wildly between October 2006, when it increased about 30% on September 2006, and the following months (falling about 30% in November, rising some 20% in December and falling by about 30% in January). The wide variations in passenger growth are a result of the change in the timings of holidays under the Hijri Calendar. (AACO31.03)
5.2 Jordan Plans Nuclear Energy by 2015
It was reported that Jordan is planning to construct a nuclear reactor for peaceful purposes. Jordan intends to operate its first reactor for the purpose of energy production in 2015. The goal is to ensure a better future and achieve continuous development. The Jordanians' policy is based on three key moves: creating a large uranium reserve for energy purposes; training suitable physicists, through the promotion of the plan at Jordanian universities; and creating relevant alliances with Western countries. King Abdullah has already declared his ambition to build a reactor for peaceful purposes and said that the acute energy crisis in his country and steep oil prices justified such a project. Other Arab states, among them Egypt and the Gulf States, have also taken a similar line and declared that they too wish to build nuclear reactors for peaceful purposes, as the Iranian nuclear program gathers momentum. It was also reported that International Atomic Energy Agency chief Mohamed El Baradei will visit Jordan on 13 April in order to learn more about Jordan's plans and look at ways of assisting the Jordanians. (Various01.04)
5.3 Jordan Ranks 1st in Education at Arab Level
The World Bank report on education quality in the Arab world underlined that Jordan has ranked first in education at the Arab level and achieved an advanced average in scientific topics that mounts to international level. The remarks were made in a lecture on the report delivered by Director General of Economic Research Forum for the Arab Countries, Iran and Turkey. The report comes in the course of serial of regional reports issued by the WB on Middle East and North of Africa region. Each report talks about a separate topic that concerns the region. (Petra25.03)
5.4 Kuwait Income Hits $50 Billion
The Kuwaiti Ministry of Finance posted record income of $49.75b in the first 11 months of the fiscal year ending this March. According to the returns, revenues are up 16.7% on the $42.6b posted in the same period of last year and already exceed the $47b posted for the whole of 2005-6. Receipts also already exceed by a massive 68.6% the government's whole year projection of $29.5b. Oil revenues reached $47b, up 16.3% on the same period of 2005-6 and 75% higher than the budget projection of $26.8b, the ministry figures showed. For the purposes of budget projections, oil income, which contributes 95% of total revenues, is calculated at the conservative price of $36 a barrel while the actual price of Kuwaiti oil has averaged around $58 this fiscal year. Kuwaiti oil output averaged 2.47 million barrels per day over the past 11 months, but in recent months the emirate has cut production to 2.4 million bpd in line with OPEC decisions to trim crude supplies to boost prices. Non-oil revenues amounted to $2.75b, compared to $2.2b a year ago. Spending in the first 11 months was $24b, up 61% on last fiscal year's expenditure of $14.9b. National Bank of Kuwait said in its latest economic report that most of the increase was due to extraordinary one-off transfers of $7b to the social security agency and an Emirate grant to citizens. The budget had foreseen revenue of $29.5b and expenditure of $38.5b, leaving a projected deficit of $9b. But analysts forecast that Kuwait will actually post a surplus of around $17b. It will be the eighth straight year the budget has been in the black. In the fiscal year that ended March 31, Kuwait posted a record surplus of $23.84b, to add to the $30b of surplus collected in the previous six years. By law, 10% of total revenues are placed in the Kuwait Fund for Future Generations. Returns on the fund's assets, estimated at well over $5b a year, do not figure in the budget. (Various24.03)
5.5 $625 Million Kuwait Oil Company Deal for New Plant
Kuwait Oil Company (KOC) signed a $624.6m deal with South Korea's SK Engineering & Construction to build an oil and gas gathering centre in the state's northern Sabriya field. The centre would have the capacity to handle 165,000 barrels per day (bpd) of oil and 240 million cubic feet of gas per day. The construction of the plant, which would take three and a half years, would help plans to increase the OPEC producer's oil output capacity to 4 million bpd by 2020. Kuwait has said it plans to increase its output capacity to 3 million bpd by 2010 and 4 million by 2020. Kuwait controls nearly one-tenth of global oil reserves. The deal was signed in Kuwait with SK Engineering, an affiliate of SK Chemical which also owns a stake in SK Corp. (Reuters27.03)
5.6 UAE Considering Monetary Revaluation
Standard Chartered Bank has raised its estimation of the probability of such an event to 40%. It had previously suggested that the chances were low, perhaps in the region of 20%. Any revaluation would be relatively small in size, between 3 – 5%, according to a research note issued by the bank on 26 March. With the GCC central bank governors scheduled to meet shortly in Medina, Saudi Arabia, there is speculation of changes to currency regimes. Standard Chartered Bank says that although the central scenario is that the UAE will leave the peg in place at its current level, it is clear that the central bank is re-examining its foreign exchange policy and the risks of a move are rising with time. This was not being discussed 12 months ago, but now it is being discussed in various ways. There are three reasons why it is unlikely for the region to opt for a managed currency float, which would enable control over interest rates. First, it would be a complex system to manage. Second, the central bank does not have at its disposal tools to manage liquidity in the financial system, an absolute necessity if they are going to manage interest rates effectively. Third, it may be that the authorities are concerned about imported inflation rather than the low interest rates. Any revaluation would probably be small because of the need not to impede diversification efforts. It would take account of the export competitiveness of non-oil activity. (TA27.03)
5.7 Abu Dhabi to Build Free Trade Zone
Abu Dhabi Airports Company (ADAC) plans to construct a state-of-the art free trade zone at the Abu Dhabi International Airport. Occupying a built area of over 7 million sq m, the free zone will offer investors an impressive package of world-class facilities and services. Clusters of amenities will be brought under one roof and all the required facilities will be conveniently integrated to ensure that investors receive the best service. The creation of a free trade zone is in response to a large-scale development economic development in the capital emirate. ADAC was incorporated in March 2006 to spearhead a major redevelopment of the Emirate's aviation infrastructure. Its creation was part of an ambitious restructuring initiative launched by the Government of Abu Dhabi, aimed at delivering better services to support the Emirate's long-term economic and tourism strategies and to help build a more vibrant economy that attracts and promotes private sector investment. (TradeArabia 27.03)
5.8 Dubai's Iron & Steel Trade Rises by 32.5%
Dubai's iron and steel trade registered a 32.5% jump in 2006 compared to 2005, reflecting the construction boom that is underway in the UAE and across the Gulf region. According to a report compiled by the Statistics Department of Dubai World, some 8.1 million tons of iron and steel worth Dh30.1 billion passed through Dubai's entry points during 2006, as against 6.6 million tons (worth Dh22.7 billion) a year earlier. It is expected that this trend will continue over the next five years since many of these projects are in their early stages. The report shows that while Dubai imported 6.3 million tons iron and iron product imports valued at Dh22.8 billion, it also registered significant exports (1.2 million tons, worth Dh4.1 billion) and re-exports (621 thousand tons, worth Dh3.1 billion). Turkey has topped the list of iron and steel exporters to Dubai, accounting for Dh4 billion or 17.5% of the total, followed by China Dh3.1billion (13.5%), India Dh3 billion (13.1%), South Korea Dh1.2 billion (5.1%), and Germany with Dh1.1 billion (4.9%). India led as importer of iron and steel products from Dubai, with a total order of Dh805.7 million (19.5%), followed by China with Dh411 million (10%), Taiwan with Dh409 million (9.9%), Indonesia with Dh246 million (6%), and Pakistan with Dh223 million (5.4%). On the re-export front, Iran took the leading spot with Dh566.7 million (18%), followed by India with Dh263.5 million (8.4%), Algeria with Dh258 million (8.2%), Iraq with Dh211.5 million (6.7%) and Qatar with Dh188.2 million (6%). (KT27.03)
5.9 Saudi Spending To Reach $116 Billion
The Riyadh Bank announced that Saudi government spending could increase 11.5% to $116b this year, up around 11.5% from the previous year. Economic growth in Saudi Arabia, the largest Gulf Arab economy, could accelerate this year on the back of the projected rise in government spending. The bank expects the GDP to grow 4.3% in 2007 compared to 4.2% in 2006. Inflation, as measured by the cost of living index, is projected to rise to 2% against 1.8% in 2006, the bank said. Saudi oil production is expected to fall from an average 9.12 million barrels per day in 2006 to 8.44 million bpd in 2007. Government revenues are expected to reach $157b, against $107b projected by the government and $175b posted in 2006. This would result in a budget surplus of $41b in 2007, against $71b in 2006. Non-oil private sector growth would drop slightly in 2007 to 6% in real terms against 6.3% in 2006, the bank said. (Various02.04)
5.10 Saudi Arabia to Drive Broadband Subscriptions Up
Saudi Arabia said it plans to push its broadband internet penetration into the double digits to remedy what it called embarrassingly low numbers. Broadband subscribers register only at 1% it is hoped to be risen to 12%, according to the kingdom's Communications and Information Technology Commission (CITC). By comparison, Saudi internet dial-up penetration stands at 16.5%. DSL penetration into households has proven very difficult. Until now local telecoms focused on expanding voice networks, though they were now also focusing their efforts on laying more infrastructure for high-speed internet. As part of this effort Saudi Telecom plans to deploy one million DSL lines. Saudi Arabia is also set to reap billions of dollars when it awards its third mobile license and second fixed-line license, both of which have attracted interest from many international consortia. It is believed the winner of the fixed line license will also be allowed to offer broadband service. Verizon, Hong Kong's PCCW, Korea Telecom and China Telecom all submitted bids together with local partners. At the end of 2005, CITC reported that incumbent operator Saudi Telecom (STC) provided service to 3.8 million fixed-line customers and three million internet users out of a population of 27 million. In 2008 or 2009, Saudi Arabia's government will unveil a unified license that will govern the application of fixed-line, mobile service as well as internet. Saudi Arabia also plans to issue a policy regarding Voice over Internet Protocol (VoIP) this year. (TradeArabia25.03)
5.11 Libya Plans Ambitious Tourism Makeover; Predicts Free Zones Will Spur Investment
Tourism infrastructure development is being given national priority by the Libyan government, with the Libyan Economic Development Board (LEDB), a policy result of the National Economic Strategy, tasked with steering the far ranging initiative. Libya seeks U.S. and international partners and investors in developing tourism infrastructure to sustain an estimated 1,000,000 visitors a year by 2015, despite the dearth in essential tourism related infrastructure as a result of long-standing sanctions and economic malaise. Libya attracted about 130,000 visitors in 2006, a drop in the bucket compared to the over 6,000,000 annual visitors its neighbors Egypt and Morocco get on average. The LEDB, which was inaugurated last month, pushes a message of a new Libya, cosmopolitan, business-friendly, yet proud of its heritage and unique geopolitical realities; of the creation of Free Trade Zones, like Abu Kammesh-Zwara and Madina Al Hurra, with gleaming hotels, resorts, and luxury developments; of liberal and transparent investment mechanisms a la Hong Kong and Dubai; of first world cities and a new vision for Libya in the 21st century. (Phoenicia Group21.03)
5.12 Musharraf Says Economic Gains Provide Foundation for Continued Growth
Pakistani President Musharraf has said the economic achievements gained in the last seven years provide a solid foundation for continued growth and prosperity in the future. The President said the government is strong and stable and will ensure continuity and consistency of policies so that the process of economic development moves ahead in a seamless and smooth manner. He said no one should try to politicize judicial matters as the government is committed to settle them in accordance with the provisions of the Constitution. The President said the economy is in a strong shape and has resulted in improving the lives of the people by generating jobs and reducing poverty. He said the prudent economics policies being perused by the Prime Minister and his team has put the country on the path of economic growth. He said the positive trends in the economy will be consolidated. Prime Minister Aziz said Pakistan's economy is poised for continued growth as a result of economic reforms, stability and continuity of policies. He said the current year will be strong in terms of growth as all economic indicators are robust. He said all actions taken by the government are in line with the construction and no one should create a situation to influence the outcome of the judicial proceedings. Reiterating that the government is committed to the supremacy of the law, the Prime Minister appealed to all sections of society especially the legal community to let the law take its course. (BR25.03)
5.13 Pakistan's Trade Deficit Projections Expanded To $13.4 Billion
Islamabad has once again revised trade deficit projections to $13.4b against the original target of $9.4b set for the current fiscal year. Official documents, prepared separately by Commerce Ministry and Planning Commission, suggest that monetary policy is one of the major reasons behind this soaring trade deficit. Commerce Ministry, which is apparently being kept away from the decision-making process on monetary policy, has projected imports of $31b during the current year. The Planning Commission has expressed serious concerns over the slow growth in exports, which has mainly contributed to high cost of doing business, stiff competition between the competitors over government subsidies and other incentives. The Commission is also of the view that several firms, especially in the textile sector, might be closed down, leading to increase in portfolio of non-performing loans, and their revival would be a costlier proposition. If the picture remains the same, as the Planning Commission has painted in its documents, Pakistan's share in the international market would further dip and then it would be difficult to recapture it in the future. While justifying unforeseen growth in imports, Commerce Ministry has argued that Pakistan's economy has been growing at a high rate for the last couple of years, as the GDP growth in 2005-06 was 6.6%, with 7% projection for 2006-07. The Ministry has further elaborated that with the increase in disposable income, demand for imports would also increase. (BR29.03)
6: TURKISH & CYPRIOT DEVELOPMENTS:
6.1 Pipeline to Pump $1 Billion Into Turkish Coffers
The Baku-Tbilisi-Ceyhan (BTC) oil pipeline project, which will transport Caspian Sea oil to world markets, has already begun to bear fruit, earning Turkey over $400m since its opening in July of last year. The general manager of Botas International Limited (BIL), the Turkish Pipeline Company, said the target for 2007 is $1b from the pipeline and that the 2008 goal is 60% more. The target is to carry 1.6 million barrels of oil per day through the pipeline. BIL gets 35 cents per barrel transported while the Treasury takes in 20 cents per barrel. The Turkish Petroleum Corporation (TPAO), moreover, gets a 6.5% share. With estimates of 584 million barrels of oil to be transported through the pipeline, the revenues of BIL and the Treasury will be $204.4m and $116.8m, respectively. TPAO's profits will exceed $700m. The 1,760 km long BTC oil pipeline is being monitored constantly through high-tech tracking units in special control rooms in Baku and Ceyhan. The gendarmerie had established 10 additional patrol stations and that 34 teams were taking part in the patrols. BIL will also purchase helicopters and conduct air surveillance along the pipeline. There have been 13 attempts at theft on the pipeline since it was officially inaugurated in July of last year. Other security measures, such as specially equipped mounted patrols, which are being used in the US, are under discussion. (Zaman27.03)
6.2 Turkey Invites Investors to Offshore Drilling
The Turkish Petroleum Corporation (TPAO) is poised to award oil detecting, exploration and drilling contracts in the Black Sea to private companies. Turkey is estimated to spend $460b for oil, including taxes, in the next 15 years. In order to avoid paying this sum and to rescue the country from foreign energy dependence, Turkey has to gear up to search for reserves. Turkey consumed 29.5m tons of oil last year and only 4.35m tons was provided domestically. The TPAO has roughly 750m barrels in reserve, which would only cover Turkey for three-and-a-half years. The company had set challenging targets for drilling in the Black Sea and that the TPAO and its partners will complete 30 deep-well and five ultra-deep-water drilling projects on its offshore platforms. The total cost of these activities will probably be between $1.5 and $2b. Regarding inland exploration in the Mediterranean region, an intense drilling program will top the agenda of the TPAO for the next three years. They have already dug 15 wells along the Syrian border and found oil in 14 of them. Crude oil production is estimated to climb to 96,000 barrels per day in 2007 from 70,000 barrel per day. (Zaman29.03)
6.3 Cypriot Renewable Energy Use Set To Double
Cyprus plans to wean itself off fossil fuels and double its use of renewable energy by 2010 through the introduction of wind power and biofuels under a European Union plan, according to the Energy Ministry. At present, solar energy is the only renewable energy form making a sizeable contribution to the energy balance at 4%. Oil represents 88% of energy use. Authorities have committed to boost the contribution of renewables to 9% of the total by 2010, with the use of renewables in electricity generation at 6%. By 2010 approximately €70m will be provided as investment and operational aid to encourage renewable energy sources and energy savings. It is expected that by the end of 2010 Cyprus will reach the target of 6% of total electricity consumption with the contribution of wind farms. Fossil fuels now firing Cyprus' energy grids represent 16% of the island's import bill. Authorities plan to establish storage terminals by 2011 for importing, storing and re-gasifying LNG. Separately, Cyprus also plans to source 1% of transport fuels from biofuels. Investments in biofuels are eligible for financing for up to C£400,000 per project. A local plant capable of producing 8,000 metric tons of biodiesel per annum is ready to start production and authorities have sought an exemption of duties on biofuels from the European Commission. (Cyprus Mail 21.02)
7: GENERAL NEWS AND INTEREST
*ISRAEL:
7.1 Holocaust Martyrs' & Heroes' Remembrance Day 2007
Israel is to mark Holocaust Martyrs' & Heroes' Remembrance Day, beginning on Sunday evening, 15 April and Monday, 16 April. Holocaust Martyrs' & Heroes' Remembrance Day (Yom Hashoah in Hebrew) is a national day of commemorating the six million Jews murdered in the Holocaust. It is a solemn day, beginning at sunset on Hebrew date of 27 Nisan and ending the following evening. Places of entertainment are closed and memorial ceremonies are held throughout the country. The central ceremonies, in the evening and the following morning, are held at Yad Vashem and are broadcast on the television. Marking the start of the day, in the presence of the President of the State of Israel and the Prime Minister, dignitaries, survivors, children of survivors and their families, gather together with the general public to take part in the memorial ceremony at Yad Vashem in which six torches, representing the six million murdered Jews, are lit. The following morning at 10:00, the ceremony at Yad Vashem begins with the sounding of a siren for two minutes throughout the entire country. For the duration of the sounding, work is halted, people walking in the streets stop, cars pull off to the side of the road and everybody stands at silent attention in reverence to the victims of the Holocaust. Afterward, there is a central ceremony at Yad Vashem, while other sites of remembrance in Israel, such as the Ghetto Fighters' Kibbutz and Kibbutz Yad Mordechai, also host memorial ceremonies, as do schools, military bases, municipalities and places of work. Throughout the day, both the television and radio broadcast programs about the Holocaust.
*REGIONAL:
7.2 Mustache Goes a Long Way to Create Awareness in Turkey
In mid-March, a number of well-known women initiated a campaign to create awareness for the lack of top female politicians in Turkey by donning ties and posters featuring drawn mustaches on their faces, attracting nationwide attention and creating a commotion that should have cost them 100 times the money they spent. The Association for Educating and Supporting Women Candidates (KA-DER), though they were criticized for putting on a “show” by wearing mustaches, KA-DER members were able to carry the issue to the agenda with this campaign. They were also able to make a $10m advertising campaign but only pay $100,000 for it. Their aim is to sustain this support until the elections, thereby raising the number of female candidates. As their campaign gears up, more celebrity women are coming to join their initiative. KA-DER enlisted the involvement of 54 women's NGOs in the campaign. The total number of NGOs that support the campaign has acceded 100.
The idea sprang from the fact that Turkey ranks 163rd among 167 countries when it comes to women's representation in Parliament. In fact, the aim of the women went beyond putting this on the agenda; it was also to show what they could achieve if women had a say in politics. The campaign will continue until the elections. KA-DER notes that the representation of women in Parliament is below that of 1934. (Zaman27.03)
7.3 Turkey Achieves Guinness Record for World's Longest Cake
A Guinness certificate has been delivered to cooks in Alanya town of Mediterranean city of Antalya who baked "world's longest cake" last year. On April 25th, 2006 in Alanya, 285 Turkish cooks have broken a world record with their 2,720 meter-long cake. "This record has been an international symbol of Alanya. We think it is important both for Turkey and Alanya. We expect this record to be used in publicity campaigns. Our record has officially been accepted to records book (of Guinness). Our record will enter in next year's edition of the book," said the Chairman of the Mediterranean Professional Cooks` Union. (TP28.03)
7.4 Turkey's First Gay & Lesbians Students Club Established At Bilgi University
In order to block homophobia and liberalize lesbians, gays, bisexuals and transgenders (LGBT) by setting a wider area for them within campus borders, around 15 students came together and founded the Lesbian, Gay, Bisexual & Transgender students club in Istanbul's Bilgi University a couple of weeks ago. They Applied to the university administration officially and were approved. The LGBT Club, Turkey's first official students club on LGBTs, prefers to take a formal identity rather than moving unofficially, aiming to make LGBTs more visible. The club is open to anyone who wants to get rid of his or her homophobia. They organize regular meetings per week. The meetings are now just to meet with more students, but in the future they were planned to be a platform for discussion. (TDN29.03)
8: ISRAEL LIFE SCIENCE NEWS
8.1 BioLineRx In-Licenses Novel Peptide for the Treatment of Inflammatory Diseases
BioLineRx signed a worldwide exclusive license agreement with Yissum Research Development Company of the Hebrew University of Jerusalem, one of the world's leading technology transfer companies, and Ramot at Tel Aviv University Ltd., the technology transfer company of Tel Aviv University, for the development and commercialization of BL-4020, a novel peptide for the treatment of inflammatory diseases. Financial terms of the license were not disclosed. BL-4020 is a peptide designed to function as an anti-inflammatory agent in various inflammatory diseases such as allergic asthma and colitis. The peptide mimics ManLAM, a protein from the cell surface of Mycobacterium tuberculosis, the bacterium that causes tuberculosis. ManLAM has been shown to modulate the function of the immune system and suppress various inflammatory diseases. BL-4020, which retains the anti-inflammatory properties of ManLAM, is expected to be effective with low toxicity. In pre-clinical trials conducted at the Hebrew University of Jerusalem, BL-4020 has been shown to be effective in a wide variety of animal models of inflammation including asthma, colitis among others. Jerusalem, Israel's BioLineRx (http://www.biolinerx.com), a clinical stage drug development company publicly traded on the Tel Aviv Stock Exchange is dedicated to building a robust pipeline of promising therapeutics for unmet medical needs. The Company's current product pipeline consists of 12 compounds, 3 of which are in or about to start clinical trials. Its lead product, BL-1020, for the treatment of schizophrenia, successfully completed Phase 1 clinical trials; BL-1040, for the treatment of damaged heart tissue post myocardial infarction, is expected to enter the clinic in Q2/07. Additional products under development include compounds for the treatment of cancer and CNS, cardiovascular, metabolic, infectious and autoimmune diseases. (BioLineRx 21.03)
8.2 BrainsGate Named a Winner of the Red Herring 100 Europe Award
BrainsGate (http://www.brainsgate.com) has been selected by Red Herring as one of the most promising 100 private companies in Europe driving the future of technology and leading the next wave of innovation. Red Herring's lists of top private companies are an important part of the company's tradition of identifying new and innovative technology companies and entrepreneurs. Red Herring's editorial staff rigorously evaluated more than 700 private companies through a careful analysis of financial data and subjective criteria, including quality of management, execution of strategy, and dedication to research and development. Ra'anana, Israel's BrainsGate's technology involves electrical stimulation of the Spheno-Palatine Ganglion (SPG), a nerve center located above the roof of the mouth. This stimulation causes blood vessels feeding the brain to dilate, thus supplying more blood to the brain. The SPG is easily accessible, using a needle-size device which is implanted in a minimally invasive, local anesthesia surgery, lasting approximately 15 minutes. The device can then be activated using an external system. BriansGate's leading indication is treatment of acute ischemic stroke, where current treatments are effective only if given within 3 hours from stoke onset, resulting in 96% of patients receiving no treatment. BrainsGate's device can be implanted in patients up to 24 hours from stroke onset, thus widening the therapeutic window and making it relevant to practically all the patient population. SPG stimulation is a general platform which can be used to treat a host of CNS related indications. Clinical testing of BrainsGate's system for the stroke application is ongoing in a multi-center, multi-national trial, with initial proof of efficacy expected in late 2007. (BrainsGate21.03)
8.3 TransPharma Medical Named Winner of 2007 Red Herring 100 Europe Award
TransPharma Medical has been selected as a recipient of Red Herring 100 Europe, an award given to the top 100 private technology companies based in the EMEA (Europe, Middle East and Africa) region each year. The Red Herring 100 Europe is an endorsement of their breakthrough RF-MicroChannel technology for transdermal drug delivery. The first two drug products based on their technology are a proprietary transdermal hPTH (1-34) product to treat osteoporosis and a transdermal hGH product to treat growth hormone deficiency, which they are developing in collaboration with Teva Pharmaceutical Industries. Both these products are currently in phase I clinical trials. Red Herring's lists of top private companies are an important part of Red Herring's tradition of identifying new and innovative technology companies and entrepreneurs. Lod, Israel's TransPharma Medical (http://www.transpharma-medical.com) is a specialty pharmaceutical company focused on the development and commercialization of drug products utilizing a proprietary active transdermal drug delivery technology. Providing an easy-to-use, cost-effective, at-home solution, TransPharma's ViaDerm drug delivery system enables the delivery of a wide variety of product candidates, including hydrophilic small molecules, peptides and proteins. TransPharma aims to develop multiple drug products through strategic partnerships with leading pharmaceutical companies and through independent product development. (TransPharma Medical 21.03)
8.4 Procognia Enters Protein Kinase Array Collaboration With GSK
Procognia has entered into a collaboration with GlaxoSmithKline to explore the use of Procognia's protein function arrays within the GSK drug development processes through a combination of Procognia's functional protein array technology and GSK's fluorescently-labeled broad-specificity kinase inhibitors. Under the collaboration, Procognia will be supplying arrays to GSK containing over 300 functional human kinases to enable it to profile its kinase hits in-house. The arrays allow researchers to profile many kinases in a single parallel experiment where previously many separate assays were required. This has many benefits including a dramatic shortening of experimental time, a reduction in sample volume, and improved comparability between results from different kinases. In addition, Procognia and GSK will work together to assess where Procognia's protein array technology can be integrated into GSK's screening process.
Procognia has been developing its kinase panel over the last fifteen months. So far it has cloned, expressed and arrayed over 1,200 proteins from throughout the proteome. It aims to have a functional human protein array containing the entire human kinome in Q2/07. The new human kinase array is the latest addition to Procognia's expanding portfolio of human functional protein arrays . Procognia's unique tagging technology ensures that all proteins retained on the array are both correctly folded and unhindered by surface attachment effects. This allows Procognia to reliably provide biologically relevant results since proteins exhibit correct in vivo function in vitro. Procognia (http://www.Procognia.com) was formed in April 2002 and it located in Maidenhead, United Kingdom and Ashdod, Israel. (Procognia 23.03)
8.5 BioLineRx In-Licenses Two Additional Drug Candidates
BioLineRx has signed in-license agreements to develop and commercialize two new therapeutic candidates: BL-3040, a small molecule for the treatment of estrogen-regulated malignancies and osteoporosis; and BL-3050, a protein complex for the treatment of atherosclerosis. This marks the third and fourth in-licensing agreements signed by BioLineRx since its IPO in February 2007, bringing the total number of drugs under development by the Company to fourteen. The worldwide exclusive license for the development of BL-3040 was signed with Yeda Research & Development Company, the technology transfer company of the Weizmann Institute of Science and with the Medical Research and Infrastructure Fund of Tel Aviv Sourasky Medical Center. The worldwide exclusive license for the development of BL-3050 was signed with Yeda Research & Development Company. Financial terms of the agreements were not disclosed. BioLineRx plans to develop the drugs through BioLine Innovations Jerusalem (BIJ) under the National Biotech Grant received in November 2004 from the Israeli Office of the Chief Scientist.
BL-3040 represents a novel class of selective estrogen receptor modulators. Osteoporosis has been shown to be related directly to a reduction in the level of estrogens. Additionally, estrogen is involved in the progression of breast cancer, ovarian cancer, uterine and endometrial malignancies. Because BL-3040 is a new chemical entity base on phytoestrogens, or estrogens derived from plants, it is believed that it could provide estrogenic effects without the associated side effects of hormone therapy thereby offering an innovative approach for the treatment of chemotherapy-resistant estrogen-regulated malignancies and osteoporosis. BL-3050 is a protein complex under development to reduce atherosclerotic plaques. BL-3050 is a complex of the improved Paraxonase 1 (PON1) and its carrier high density lipoprotein HDL ("good" cholesterol) for the treatment of atherosclerosis. The drug has been shown to prevent LDL oxidation (formation of "bad" cholesterol) and induced cholesterol efflux from cells, indicating that it is able to reverse the formation of cholesterol plaques leading the atherosclerosis.
Jerusalem, Israel's BioLineRx (http://www.biolinerx.com), a clinical stage drug development company publicly traded on the Tel Aviv Stock Exchange (BLRX), is dedicated to building a robust pipeline of promising therapeutics for unmet medical needs. The Company's leading programs are for schizophrenia and treatment of damaged heart tissue post-myocardial infarction. Additional products under development include compounds for the treatment of cancer and CNS, cardiovascular, metabolic, infectious and autoimmune diseases. (BioLineRx26.03)
8.6 NasVax Announces Successful Completion of Another Pre-Clinical Trial
NasVax announced the successful completion of another pre-clinical trial in ferrets. The ferret model was chosen as the most preeminent animal model for the study of influenza vaccines and its efficacy. In this trial NasVax examined its unique technology for intramuscular and intranasal administration of influenza vaccine including the protection of vaccinated animals against infection with the live influenza virus. Findings of both means of administration were successful having proven significant efficacy in comparison to the standard commercial vaccine. The results of the intramuscular trials showed significantly higher efficacy of NasVax's technology combined with the commercial vaccine, when compared to the efficacy of the commercial vaccine alone. This efficacy was expressed by a significant increase in antibodies against the virus, a decrease in the amount of virus found in the animals' noses and a significant decrease of influenza disease symptoms. The ferrets that received one third of the traditional vaccine dosage, combined with the company's intramuscular technology, showed similar improved efficacy compared to the full dose of the commercial vaccine given alone. This was evident by a significant decrease in the amount of virus found in their noses after infection, an increase in antibodies against the virus and a significant decrease in the disease's symptoms.
Herzliya, Israel's NasVax (http://www.nasvax.com) engages in the development of improved vaccines. Its technology platform is based on proprietary polycationic sphingolipid-derived molecules that serve both as a potent adjuvant for stimulating enhanced immune responses via the Th1 and Th2 pathways as well as an efficient carrier. The platform enables intranasal as well as intramuscular and subcutaneous administrations. (NasVax27.03)
9: ISRAEL PRODUCT & TECHNOLOGY NEWS
9.1 Civcom Expands Its M-DCM Line to Offer Complete Solution from Modules to Subsystems
Petah Tikva, Israel's CIVCOM (http://www.civcom.com), a leading technology developer and manufacturer of Opto-electronic components, modules and subsystems announced the expansion of its Manageable Dispersion Compensation products (M-DCM) to include M-DCM Multi Ports Subsystem solutions. Civcom initially established the M-DCM line with a wide range offering of Single and Multi Channel DCF replacement Modules. Based on multiple configurations of Manageable Dispersion Compensation solutions, the M-DCM Modules provide an advance way to enhance fiber capacity with up to 40Gbps data rate. Servicing submarine and terrestrial applications M-DCM Subsystem provides a wide variety of In-line and Pre & Post compensation. Civcom is now adding to its thriving product line the “Instant-Play” Subsystem. M-DCM Instant Play offers a range of products based on multiple configurations of Manageable Dispersion Compensation solutions which function as DCF replacement. Customizes for each specific need: In-Line and/or Pre & Post compensation, Multi and/or Single Channel, 10Gbps and/or 40Gbps operation — inside a customize rack with hot-swappable M-DCM module ports. The M-DCM Subsystem is currently available in two (2) shelf sizes to fit seamlessly into existing networks and to accommodate a wide variety of installation and upgrade options: (Civcom21.03)
9.2 RADVISION SIP Server Platform Enables Secured Internet Voice Services Solution for Enterprises
RADVISION announced that its SIP Server Platform and Advanced RTP Toolkit was embedded in BlueNote Network's Service Oriented Architecture (SOA) IP telephony products. SessionSuite leverages RADVISION's SIP Server Platform to provide standards-based, secure voice services for IP telephony users. SessionSuite also integrates RADVISION's SRTP Add-on, a media security library that is part of RADVISION's Advanced RTP Toolkit, to integrate media encryption functions. The RADVISION SIP Server Platform and complementary add-on toolkits offer developers a comprehensive set of tools for developing IMS and SIP solutions, and allow customers to focus on the differentiating features of their applications, significantly shorten development cycles for rapid time-to-market, and lower the total cost of ownership for end users. The RADVISION SIP Server Platform delivers standard SIP services such as Presence and Events services, Proxy and Redirect services and Registrar services. In addition, the SIP Server Platform offers a flexible Service Creation Framework for rapid development of advanced services with High Availability support. Tel Aviv, Israel's RADVISION (http://www.radvision.com) is the industry's leading provider of market-proven products and technologies for unified visual communications over IP, 3G and IMS networks. With its complete set of standards-based video networking infrastructure and developer toolkits for voice, video, data and wireless communications, (RADVISION21.03)
9.3 IncrediMail Receives iParenting Media Award
IncrediMail announced its email product was recently honored among the “Best Software Products of 2007”, by iParenting Media, one of the internet's popular communities for parents and soon-to-be parents. Nominees for iParenting Media Awards undergo a rigorous review and evaluation process. Nominated products are analyzed and reviewed by four members of iParenting's review panel of parents, experts, licensed childcare centers and schools nationwide. Tel Aviv, Israel's IncrediMail (http://www.incredimail-corp.com) designs and markets an integrated suite of customized and entertaining email software products for the consumer market, offering users the ability to design highly personalized email presentations with our large collection of multimedia content for email communication. Their products include : IncrediMail Xe, which allows users to personalize email messages with creative features and is offered free of charge; IncrediMail Premium, an enhanced version of IncrediMail Xe; IncrediMail Letter Creator, which enables further personalization of backgrounds; The Gold Gallery, a content database of additional backgrounds, animation and notifiers; JunkFilter Plus, an anti-spam solution; and the recently introduced Magentic, a solution offering desktop Wallpapers and Screensavers. (IncrediMail21.03)
9.4 Siemens Selects NICE Video Content Analysis Solution to Enhance Belgian Railways' Security
NICE Systems has been selected by its partner Siemens, to enhance safety and security at the Belgian railways network. Siemens, which developed together with NICE safety and security solutions specializing in motion control tailored to the mass transit sector, selected NICE due to the strong partnership between the two companies. NICE was also selected due to its IP-based, advanced real-time distributed digital video solution, for better protection of the tracks and stations, and enhanced passenger safety and security. Approximately 200 million passengers a year use the train as their means of transport in Belgium, and the railways network also carries close to 60 million metric tons of goods annually. To protect and secure this growing service, NICE's advanced real-time distributed content analysis digital video surveillance solution, NiceVision, was selected to manage the security of dozens of stations across the country from a state-of-the-art central control room over an advanced IP network. Ra'anana, Israel's NICE Systems (http://www.nice.com) is the leading provider of Insight from Interactions solutions, based on advanced analytics of unstructured multimedia content – from telephony, web, radio and video communications. NICE is revolutionizing VoIP interactions management with state-of-the-art solutions for IP contact centers, branches, and command and control centers. NICE's solutions are changing the way organizations make decisions, helping them improve business and operational performance, address security threats and be proactive. (NICE21.03)
9.5 Alvarion Addressing Widespread Demand for 802.16e-Based Solutions
Alvarion announced that its new BreezeMAX system, designed to comply with 802.16e, is available to address widespread demand for solutions based on the latest version of the WiMAX standard. After successful network trials and extensive testing now taking place in different regions around the world with customers in Angola, Costa Rica, El Salvador, France, Guatemala, Japan, Mexico, Norway, Russia, United States and other countries, Alvarion's new BreezeMAX system is designed to enable broadband anytime, anywhere as part of its 4Motion comprehensive network solution for mobile WiMAX. One example is DigitalBridge Communications (DBC), a provider of broadband services to underserved communities using WiMAX technology, which has selected Alvarion as its solutions partner. Using Alvarion's award-winning BreezeMAX as its radio access network (RAN), 4Motion operates at 2.3, 2.5, and 3.5 GHz and is already being used by more than 15 customers to provide fixed, nomadic and portable broadband services in urban, suburban and rural areas alike. BreezeMAX and 4Motion are the foundation of Alvarion's OPENTM WiMAX, an operator-centric, all-IP ecosystem that will enable service providers to choose network equipment and consumer electronics equipment from any combination of vendors and partners to best fit their specific mobile network requirements. With more than 3 million units deployed in 150 countries, Tel Aviv, Israel's Alvarion (http://www.alvarion.com) is the world's leading provider of innovative wireless broadband network solutions enabling Personal Broadband to improve lifestyles and productivity with portable and mobile data, VoIP, video and other services. Leading the market with the most widely deployed WiMAX system in the world, Alvarion is leading the market to Open WiMAX solutions with the most extensive deployments and proven product portfolio in the industry covering the full range of frequency bands with both fixed and mobile solutions. (Alvarion21.03)
9.6 ioimage Releases All-in-One Intelligent IP PTZ Video Security Camera With Autonomous Tracking
Ioimage announced the release of the ioicam xptz100dn, an IP pan, tilt and zoom (PTZ) camera with autonomous tracking capabilities. Joining ioimage's line of ioicam intelligent video cameras, the xptz100dn is an all-weather, day/night camera with built-in analytics that delivers cost-effective security automation over wide areas. With its ability to automatically detect and track intruders, vehicles and other threats, the field-proven xptz100dn enhances safety and security for government, public and commercial organizations. The indoor/outdoor camera addresses diverse security functions including remote or unmanned wide-area surveillance and deterrence beyond property borders. Featuring self-driven, vision-guided, PTZ-based autonomous tracking to ensure a continuous image of the target, the xptz100dn also enables step-and-stare detection over presets – detecting and looking at one predefined area before jumping to another. As a result, the xptz100dn delivers cost-effective 24/7 monitoring of perimeters, compounds, industrial facilities, construction sites, and other large areas typically secured by patrols, sensors or other expensive solutions. Herzliya, Israel's Ioimage (http://www.ioimage.com), the pioneer of intelligent video appliances, provides high-performance video encoders and cameras with built-in analytics, designed and packaged for simplicity. ioimage offers a new approach to video security by transforming surveillance into a proactive, event-driven process. Founded in 2000, ioimage uses networked, DSP-based devices for real-time detection, alert and tracking of intruders, vehicles and other threats, leading to enhanced safety and security for government, public and commercial organizations. (ioimage 21.03)
9.7 Digitel GSM Places First Time Order for ECtel's Integrated Revenue Management Solutions
ECtel announced that Digitel GSM, a wireless operator in Venezuela, has placed a first time purchase order for ECtel's Integrated Revenue Management Solutions. The order includes ECtel's revenue assurance solution RAP, FraudView Release 8, and I-Probes for real-time collection of network information. As part of the project, FraudView Release 8 is expected to replace an existing fraud management system of one of ECtel's main competitors. The order is valued at over $1.7m. Digitel GSM provides wireless services and offers next generation equipments and services in Venezuela. Digitel was pioneer in launching advanced services such as text and multimedia messaging based on its GPRS platform. ECtel's Integrated Revenue Management product framework consists of its leading fraud management and revenue assurance solutions, FraudView and RAP. FraudView features an array of unique, state-of-the-art fraud detection and prevention technologies enabling thousands of fraud controls. RAP is ECtel's automated revenue assurance platform that facilitates cost-effective assurance of revenues and processes. It provides a unique set of functionalities and capabilities and enables operators and system integrators to implement system interfaces, define Key Performance Indicators (KPIs), add or update revenue assurance KPIs, controls and more.
Rosh Ha'ayin, Israel's ECtel (http://www.ectel.com) is a leading global provider of Integrated Revenue Management (IRM) solutions for communications service providers. A pioneering market leader for over 15 years, ECtel offers carrier-grade solutions that enable wireline, wireless, converged and next-generation operators to fully manage their revenue and cost processes. ECtel IRM Product Suite features the world-leading fraud and revenue assurance products, FraudView and RAP, which minimize operator revenue leakage across networks and operations support systems (OSSs). (ECtel21.03)
9.8 UltraShape CONTOUR I Named 'Product of the Year' by Ultrasonic Industry Association
UltraShape has been selected as the Ultrasonic Industry Association's (UIA) New Product for 2007. The UltraShape CONTOUR I system, based on patented focused ultrasound technology, is the first and only clinically proven -non-invasive body contouring solution for both men and women. It is designed to target and disrupt fat, leaving surrounding structures such as skin, blood vessels, and nerves intact. The UltraShape procedure is guided by proprietary real-time tracking and guidance software designed to deliver smooth, uniform body contouring results. The software guarantees adherence to a pre-determined treatment algorithm minimizing risk of contour irregularities, a common side effect of liposuction which is highly technique sensitive surgical procedure. The UltraShape procedure is performed during a convenient, "walk-in, walk-out" session carried out in an office-based environment; it requires no anesthesia or sedation, and the vast majority of patients report no pain or discomfort. After treatment, patients immediately resume their daily routines and there is no need for maintenance treatments. Yokneam, Israel's UltraShape (http://www.ultrashape.com) develops, manufactures and markets innovative, non-invasive solutions for the aesthetic medical field. The UltraShape expert team is dedicated to the development of cutting-edge body-contouring technology in a mission to enhance patients' self-image and sense of well-being. (UltraShape 21.03)
9.9 RADVISION's Innovative Video Applications Running on SCOPIA Interactive Video Platform
RADVISION is introducing a wide range of off-the-shelf, ready-to-deploy, mobile interactive video applications as well as sample applications for developers. These compelling content delivery and visual communication services run on the SCOPIA Interactive Video Platform, the field-proven IMS-ready media server for developing and deploying advanced interactive video applications. The SCOPIA Interactive Video Platform and 3G Video Gateway are core infrastructure elements that enable the deployment of exciting converged interactive video services, connecting multiple real-time video sources in applications delivered over UMTS, CDMA EV-DO, Cable and other IP networks. These services allow operators and service providers to increase chargeable bandwidth to maximize ARPU, reduce churn and strengthen subscriber loyalty. The SCOPIA Interactive Video Platform offers a rich feature set and unique user experience, leveraging its advanced video processing, LINUX-based network management, advanced media and VCR controls, a recording API, and an enhanced, IMS-ready SIP interface. Tel Aviv, Israel's RADVISION (http://www.radvision.com) is the industry's leading provider of market-proven products and technologies for unified visual communications over IP, 3G and IMS networks. With its complete set of standards-based video networking infrastructure and developer toolkits for voice, video, data and wireless communications, RADVISION is driving the unified communications evolution by combining the power of video, voice, data and wireless – for high definition video conferencing systems, innovative converged mobile services, and highly scalable video-enabled desktop platforms on IP, 3G and emerging next-generation IMS networks. (RADVISION 22.03)
9.10 Discretix Multi-Scheme DRM Client on TI's M-Shield Mobile Security Platform
Discretix announced the Discretix Multi-Scheme DRM client for Texas Instruments Incorporated (TI's) OMAP platform. Discretix' Multi-Scheme DRM takes advantage of TI's M-Shield security technology for the OMAP platform creating a robust, highly secure and future-proof DRM solution that shortens development time and provides DRM flexibility in mobile devices. Discretix Multi-Scheme DRM supports the broadest range of major DRM standards including OMA DRM v2.0, Microsoft WM-DRM 10 and i-Mode DRM including CPRM/SD-Bind. In addition to support for these schemes, the technology is able to accommodate new standards as they become available. Discretix Multi-Scheme DRM complements the capabilities of TI's M-Shield mobile security technology. Kfar Netter, Israel's Discretix (http://www.discretix.com) is a leading provider of embedded security technology for mobile devices and flash memory storage. Discretix technology, which incorporates both hardware and software components, enables security to be incorporated into products at the chipset level, making it transparent to the end-user while protecting sensitive information from malicious attacks, viruses, fraud, and theft. Discretix' solutions are deployed in a wide array of devices and mobile systems to enhance security, reliability, and user experience. (Discretix: 26.03)
9.11 New Mellanox ConnectX IB Adapters Unleash Multi-core Processor Performance
Mellanox Technologies announced the availability of the industry's only 10 and 20Gb/s InfiniBand I/O adapters that deliver ultra-low 1 microsecond (µs) application latencies. The ConnectX IB fourth-generation InfiniBand Host Channel Adapters (HCAs) provide unparalleled I/O connectivity performance for servers, storage and embedded systems optimized for high throughput and latency-sensitive clusters, grids and virtualized environments. Building on the success of the widely deployed Mellanox InfiniHost adapter products, ConnectX IB HCAs extend InfiniBand's value with new performance levels and capabilities. Mellanox Technologies is a leading supplier of semiconductor-based, high-performance, InfiniBand interconnect products that facilitate data transmission between servers, communications infrastructure equipment, and storage systems. The company's products are an integral part of a total solution focused on computing, storage and communication applications used in enterprise data centers, high-performance computing and embedded systems. In addition to supporting InfiniBand, Mellanox's next generation of products support the industry-standard Ethernet interconnect specification. Founded in 1999, Mellanox Technologies (http://www.mellanox.com) is headquartered in Santa Clara, California and Yokneam, Israel. (Mellanox26.03)
9.12 MobiMate's WorldMate i10 Revolutionizes Travel Services for Frequent Fliers
MobiMate announced details of its next generation mobile travel service code named WorldMate i10. The service is the first of its kind, designed to empower the tens of millions of business travelers and frequent fliers when they are in need of real-time information. It combines context based push and pull services culminating in a "Personal Travel Assistant" experience. WorldMate i10 is comprised of downloadable mobile client and server, a Microsoft Outlook Add-In and an accompanying website. The Outlook Add-In automatically pieces together the travelers' itinerary details – flights, hotel, car rental and meetings, for immediate inspection on their mobile phones or through the WorldMate i10 website. Just prior to the trip, WorldMate i10 starts tracking the itinerary in real-time pushing details and suggestions when required. For example, when a flight is delayed or cancelled, the user is notified immediately and then presented with alternative flights for the desired destination. When arriving at a new destination, WorldMate i10 greets the user with a message outlining the next few items on her itinerary along with the local time and weather as well as maps/directions to her hotel.
Rehovot, Israel's MobiMate (http://www.mobimate.com) is the clear leader in the mobile travel-related services category with WorldMate – the leading mobile travel service. MobiMate's unique approach to the Mobile Internet sees the product as a combination of clever, attractive and user-friendly software, valuable content and services from recognized sources, and an on-line service delivering this content to the end-user's device. (MobiMate26.03)
9.13 ECI Telecom First to Announce Integration of IMS Architectural Elements into Access Node
ECI Telecom announced the integration of IMS elements into a multi-service access node (MSAN), allowing it to function as a gateway and policy enforcement point. ECI's Hi-FOCuS-5 is an IMS-tuned MSAN which also supports voice with the industry's highest density, non-blocking, 64-port voice line card. This is the industry's first MSAN to offer carriers an alternative architectural model for IMS deployment that can deliver significantly lower cost for the build-out of next-generation networks. The current model within an IMS network uses centralized Border Gateway Function (BGF). With this alternative architectural model, carriers are able to distribute the control and policy enforcement capabilities (such as admission control and traffic management) between the MSAN and the edge router. This model better suits the emerging multi-edge, distributed architectures accommodating massive deployments. IMS-tuned capabilities include H.248 protocol, as well as the Access Node Control Protocol (ANCP), allowing service providers to connect the MSAN directly to the IMS and ETSI TISPAN control layer. In addition to supporting these protocols, ECI's Hi-FOCuS-5 MSAN has policy enforcement capabilities that allow it to act as a Policy Enforcement Point (PEP) in IMS architecture. The MSAN's policy capabilities improve the service providers' abilities to monitor and control, as well as scale authentication and subscriber rights.
Petah Tikva, Israel's ECI Telecom (http://www.ecitele.com) delivers innovative communications platforms to carriers and service providers worldwide. ECI provides efficient platforms and solutions that enable customers to rapidly deploy cost-effective, revenue-generating services. ECI has consistently delivered customer-focused networking solutions to the world's largest carriers. The Company is also a market leader in many emerging markets. (ECI26.03)
9.14 Orca Interactive Launches Triple Play Services with Greek IPTV Pioneer ON Telecoms
Orca Interactive announced that ON Telecoms is using Orca's RiGHTv middleware in a pioneering Greek IPTV deployment. This deal demonstrates Orca's ability to enable innovative operators to design their own solutions and launch successful IPTV rollouts in a short time to market. In four months from engagement to launch, ON Telecoms began offering an attractive triple play package for customers in January 2007, including live TV (hybrid of DVB-T and IP channels), on-demand services such as video on demand (VOD) and super fast broadband up to 10 Mbps. The service uses MPEG-4 technology and can provide channels in Standard Definition or High Definition quality. Orca Interactive (http://www.orcainteractive.com) is a leading provider of IPTV middleware and applications for broadband network operators and service providers. Orca enables triple-play providers to deliver a full array of attractive video-over-IP services that generate new revenue streams and strengthen customer loyalty. Leveraging a flexible telco-grade middleware platform, Orca empowers operators to deliver broadcast TV, video on demand (VOD), personal video recording (PVR), home media and other compelling interactive services. Orca's SI-enabled solutions are designed for easy outsourcing of integration services by an operator's preferred systems integrator. (Orca 26.03)
9.15 RC & Runcom Complete Development of Mobile WiMAX Base Station and User Terminal
Japan Radio Company (JRC) and Runcom Technologies recently completed the development of Mobile WiMAX base station equipment and user terminals based on advanced version of the IEEE802.16-2005 standard. These utilize the highest FFT size (2K) and bandwidth (20MHz) defined in the standard, the equipment operating at 2.5GHz achieved a record throughput of 30 megabits per second. The User Terminals and Base stations developed by JRC are based on Runcom's unique OFDMA silicon technology embedded into the RNA200 ASIC and RNF2000 FPGA solution respectively. Rishon LeZion, Israel's Runcom (http://www.runcom.com) is a technology company pioneering OFDMA based silicon solutions for user terminals and base stations that comply with the IEEE802.16-2005 standard for WiBro and Mobile WiMAX applications. Runcom products include the PHY and MAC communication layers. Runcom RNA200 ASIC was the first Mobile WIMAX compliant ASIC in the market. (Runcom 27.03)
9.16 emoze Launches First-Ever Free Global Service for Push Email Without Server Side Software
Further expanding the convenience and broadening the appeal of its free mobile push email and data synchronization service, emoze has launched a new global service that doesn't require users to leave their PCs on. emoze is the first company to offer a central server solution with a seamless connection via an Outlook Web Access (OWA). The expanded service offering is completely free of charge to consumer and businesses. The process for using the central server is simple. When downloading emoze at http://www.emoze.com, users are given a choice of using their own PC as a connector; or the central server. If the user chooses the central server, they will have to install the emoze mobile client and will then be prompted to provide their OWA credentials which are encrypted and stored locally on their own mobile device. The new option is particularly suited for those not wishing to leave their PC running to enable push email and personal information management (PIM) data. Both the PC connector and central server options are highly secure, leveraging efficient encryption mechanism, decryption and data compression technologies. Future central server upgrades will handle connections to Lotus web-access Gmail, Yahoo! mail and other popular email services. The emoze Central Server, combined with push technology, is a unique solution that provides the mass market with real-time push-email and PIM data synchronization without the need for any additional components either on the PC or corporate ends. All users need is a compatible phone and a data package from a mobile operator.
Ra'anana, Israel's emoze (http://www.emoze.com) turns mobile phones and mobile devices in to fully functional personal communication devices with a single, simple and free download for the individual user. It delivers real-time, secure synchronization of emails, calendars, contacts and tasks – pushing data and updates to you anytime, anywhere using any mobile service provider network or WiFi and all leading brands of mobile device. As a spin-off of Emblaze in 2006, emoze has users in almost every country worldwide. emoze is a subsidiary of the Emblaze Group. (emoze27.03)
9.17 RADCOM Debuts QTrace for 3G Mobile Network Operators
RADCOM unveiled QTrace, a powerful new addition to Omni-Q, its award-winning network and service quality management system. QTrace facilitates real-time troubleshooting and emergency call detection by enabling call searches across multiple sites. Its multi-server architecture support allows online call tracing of all open calls, on select call groups, across large mobile networks. Using QTrace, operators can export full session traces without having to install software. The shared information provides insight into subscriber behavior and experience that is valuable to operator engineering, customer care, and marketing groups. The Omni-Q system is a comprehensive, next-generation network testing, monitoring and performance quality management solution. It consists of a powerful and user-friendly central management module and a broad range of intrusive and non-intrusive probes covering various networks and services, including VoIP, UMTS, CDMA, and data. Omni-Q is powered by the Gear Set, an innovative chipset online session processor, the foundation of the company's high-end, hardware-based probe, the R70. The R70 delivers the highest performance in the industry, and is fully scalable for future challenges. The system solution provides both vertical (7 layers) and Horizontal (cross-network) visibility into every session/event affecting the successful delivery of services. This visibility is network-element (NE) independent, and is not sensitive to the introduction of new services, software upgrades or modifications.
Tel Aviv, Israel's RADCOM (http://www.RADCOM.com) develops, manufactures, markets and supports innovative network test and service monitoring solutions for communications service providers and equipment vendors. The company specializes in Next Generation Cellular as well as Voice, Data and Video over IP networks. Its solutions are used in the development and installation of network equipment and in the maintenance of operational networks. The company's products facilitate fault management, network service performance monitoring and analysis, troubleshooting and pre-mediation. (Radcom 27.03)
9.18 fring Rings in Mobile VoIP Freedom of Choice
fring announced that it is the first company to facilitate true mobile independence by enabling fring users to choose any SIP provider to make mobile VoIP (mVoIP) calls to regular phones. For the first time, fring users (fringsters) can easily pick-and-choose between their favorite SIP-based VoIP networks, even without a SIP-enabled phone. This pioneering development from fring benefits mobile users who are now free to communicate using hundreds of SIP providers to make SIP-to-SIP calls and SIP calls to regular landline and cellular phones. fring has also broken the technology barrier to enable fringsters to use SIP provider accounts even if their handset does not support SIP. fring is pre-programmed to recognize several SIP providers including GizmoProject, VoipCheap and VoipStunt, but users can easily configure many other providers through a simple guided process. fring compatibility with SIP providers allows mobile users to save money by communicating through their operator's data package, using their choice of VoIP provider rather than traditional more expensive “talk” airtime. Reduced calls charges are shared with family and friends who benefit from cheaper deals when calling fringsters on their SIP VoIP-in, or SkypeIn numbers.
Headquartered in Tel Aviv, Israel, fring (http://www.fring.com) is a mobile Voice over Internet Protocol (mVoIP) product that allows users to make free calls over mobile and cellular data networks or a Wi-Fi connection. fring uses 3G over mobile phone networks and therefore provides a continuous call connection. It is 100% free with no subscription costs; consumers simply pay for the data they use under their existing line rental agreement. Completely PC-independent, it requires no additional hardware and no location limitations (e.g. Wi-Fi hotspots). fring also integrates with the Windows Live Messenger, Skype and Google Talk & SIP networks. (fring28.03)
9.19 VocalTec Receives Significant Purchase Orders From Deutsche Telekom
VocalTec Communications received significant purchase orders from Deutsche Telekom. Deutsche Telekom is among VocalTec's longest-standing customers, having used VocalTec products for approximately ten years. VocalTec expects revenues of approximately $1.8m from these orders during 2007 and the first half of 2008. Herzliya, Israel's VocalTec Communications (http://www.vocaltec.com) is a global provider of carrier-class multimedia and voice-over-IP solutions for communication service providers. A pioneer in VoIP technology since 1994, VocalTec provides proven trunking, peering, service delivery and access gateway solutions that enable flexible deployment of next-generation networks (NGNs). (VocalTec28.03)
9.20 IPTV System From Optibase Helps Humberside Police Fight Crime
Optibase announced that Humberside Police, UK has upgraded their current IPTV system with Optibase's carrier-grade, MPEG-4 H.264 solution. Together with local UK partner, Cotswold Communications, Optibase's delivered a system that includes MediaGateway encoding platforms, which will be streaming feeds coming from the police helicopter to multiple PC clients across the force's network. For Humberside police, the idea of officers watching video footage in their fight against crime is not a new one, in fact they have been using and IPTV system since 2003. With this system, the Humberside police are able to effectively deal with the challenge of having the right decision making resources at the site of a crime or an accident. The force transmits live video feeds from a helicopter, thus providing coverage across an area of 1,365 square miles around the city of Kingston Upon Hull and the Humber estuary on England's east coast. The feeds are distributed across the force's LAN and can be monitored on multiple PC clients by any authorized personnel in real-time. Herzliya, Israel's Optibase (http://www.optibase.com) provides professional encoding, decoding, video server upload and streaming solutions for telecom operators, service providers, broadcasters and content creators. The company's platforms enable the creation, broadband streaming and playback of high quality digital video. Optibase's breadth of product offerings are used in applications, such as: video over DSL/Fiber networks, post production for the broadcast and cables industries, archiving; high-end surveillance, distance learning; and business television. (Optibase28.03)
9.21 OnSSI & Agent Vi Provide a Powerful Solution for IP Video Surveillance
Suffern, NY's On-Net Surveillance Systems (OnSSI), a market leader in non-proprietary, open architecture IP-based video surveillance software solutions, and Agent Video Intelligence announced a strategic partnership to enhance OnSSI's Intelligent IP Video Surveillance solution suite with the addition of advanced content and video analytics software from Agent Vi. Content and video analytics provide immediate detection of critical changes in the entire observed environment and instantly alert security personnel to these dangers. Content analytics work in conjunction with the cameras' built-in analytic modules, and are controllable from within the network video recorder (NVR) and video client interfaces. Users can customize and designate multiple rules and schedules so only data violating established security threshold criteria is displayed. Cooperation between OnSSI and Agent Vi demonstrates the companies' commitment to effectively lead the marketplace and conquer the growing security challenges of customers, today and in the future. With headquarters in New York and the R&D Lab in Tel Aviv, Israel, Agent Video Intelligence (http://www.agentvi.com) is the global leader with the only enterprise grade solution in Video Intelligence and Video Content Analysis Technology with its patented Image Processing over IP (IPoIP) family of video surveillance software. Agent Vi is the first company to provide embedded and distributed artificial- intelligence video analytics software with the low bandwidth required by video surveillance networks to support extremely large numbers of distributed cameras at lowest industry cost. (On-Net 28.03)
9.22 Gilat Provides Broadband Satellite Network With More Than 3,000 Sites for Major European Retail Chain
Gilat Satellite Networks has provided a broadband satellite network which includes more than 3,000 VSATs for deployment at one of Europe's large retail chains. The network, based on Gilat's SkyEdge Pro VSATs, will enable cost-effective and reliable broadband communications to be provided to thousands of the chain's stores located in European countries. The network will be used for Point of Sale (POS) applications, ATM services and video and audio streaming. As part of this deal, Gilat's SkyEdge Pro VSATs are embedded with multi-media cards which will enable digital signage applications such as broadcasted targeted advertisements and in-store music to the chain's stores. Based on IPTV technology, this solution provides efficient audio/video multicasting, including advanced video standards such as MPEG-4 and multi-language support for the chain's different country locations. Gilat's SkyEdge is a satellite communications platform that delivers high quality voice, broadband data and video services over a powerful unified system. The platform represents Gilat's deep knowledge base and field-proven product offering, acquired through nearly two decades of experience. SkyEdge's flexible architecture and efficient space segment utilization make it an ideal platform for operators and service providers. Petah Tikva, Israel's Gilat Satellite Networks (http://www.gilat.com) is a leading provider of products and services for satellite-based communications networks. (Gilat29.03)
10: ISRAEL ECONOMIC STATISTICS
10.1 State of Economy Index Rises By 0.3% in February
The Bank of Israel announced on 22 March that the State of Economy Index rose 0.3% in February. The combined index rose by 0.8% in January-February. The rise in the index was affected by a significant rise in the index of trade and services revenues and a rise in the index of services exports, offset in part by a steep decline in goods exports and in manufacturing production as well as a drop in goods imports. Notably, the indices for January 2007 and December 2006 were revised downwards as a result of the downward adjustments of the December index of manufacturing production and the January index of goods imports. On the other hand, there was an upward revision of the January index of services exports. With regard to the various components of the index, the index of manufacturing production fell in January by 2.2%, following its 0.9% decline in December. The trade and services revenue index rose in January by 2.9%, after dropping by 1% in December. The goods exports index plunged by 14.2% in February, following its 8.9% surge in January. The services exports index rose in February, by 0.9%, following its jump of 16.1% in January. The imports index fell by 1.2% in February, following its 2.7% decline in January. (BoI22.03)
10.2 Israel's Exports Increased by an Annualized 6.7% in December-February
The Central Bureau of Statistics announced on 28 March that Israel's exports (excluding diamonds, ships & planes) rose by an annualized 6.7% in December 2006-February 2007. Manufactured exports rose by an annualized 5% and high-tech exports rose by 8%. Imports of investment goods rose by an annualized 38%. The data indicate that the economy is still growing faster than expected, including fairly rapid increase in private consumption. However, there are signs that industrial output is slowing, which rose by an annualized 1% in November-January (the latest known figures), after rising by 5% in August-September. It is net yet clear if the slowdown is temporary or the start of a new trend. High-tech output continued to expand fairly rapidly, growing by an annualized 6.5%. Trade and services proceeds rose by an annualized 9% in December-January, and credit card purchases rose by over 11%. Retail sales rose by 9%, including a 5% increase in food sales at supermarkets. Departures overseas rose 23% in December-February, while hotel overnights by Israelis rose by 1.5%. (CBS28.03)
10.3 Israel's Foreign Debt Falls 53% to Record Low
On 27 March, the Bank of Israel announced that Israel's net balance of external liabilities totaled $14b at the end of 2006, 53% less than at end of 2005 and the lowest ever figure as a proportion of GDP. Israel's net external surplus (debt instruments) rose by of $10b during 2006 to reach a record $31.5b at the end of 2006. The short-term asset (debt-instrument) surplus rose by $8.3b to $47b at the end the year. The balance of assets abroad totaled about $156b at end of 2006, a rise of $34b on the end-2005 position. Most of this increase was due to an increase of about $13b in direct investments, with the Teva Pharmaceutical Industries deal contributing some $10b of this. Portfolio investments grew by $10b due to continuing portfolio adjustments in the private non-banking sector in light of the tax reform. The balance of other investments grew by $10b mainly due to the banking system's deposit abroad (of $6b) as a result of their foreign-currency surplus, and deposits of the business sector abroad (principally through the transfer to deposits abroad of receipts from the Iscar deal). The balance of Israel's external liabilities totaled some $171b at the end of 2006, a rise of about $18b compared with the end of 2005. Direct investments in Israel during 2006 were influenced by global trends, including growth led by an expansion in world trade, which increased both the amount of capital seeking investment opportunities and company profitability, as well as a wave of mergers and acquisitions. (BoI27.03)
10.4 Israel's Terms of Trade Improve
The Central Bureau of Statistics announced on 22 March that Israel's terms of trade (excluding ships, planes, diamonds and fuel) improved by 1% in 2006, after improving by 1.3% in 2005, due to an increase in exports. Exporters' aggregate profits rose by 3.1% in 2006, partly thanks to an increase in exports and a 0.9% strengthening of the euro against the dollar. Exporters' profits rose by 10% in 2004-06. Exporters' aggregate profits, including diamond merchants, rose by 4.2% in 2006. Prices of imports rose by 2% in 2006 because of the strengthening of the euro. Prices of imports rose by 9.2% in 2004-06. (CBS22.03)
10.5 Eilat Expects 30,000 Visitors for Passover
The Eilat Hotel Association expects 10,000 foreign tourists for Passover, mostly from France and the UK, plus 20,000 Israelis. Total tourist revenue is expected to reach $24m. Some 7,000 tourists will arrive directly in Eilat while the rest will come via Ben Gurion Airport. Most of the foreign tourists will stay one to two weeks. The Eilat Hotel Association predicts 85% room occupancy rate for the Seder night. Prices are fairly high, about the same as last year, because of heavy demand. Some 170,000 tourists are expected to arrive in Israel during April, compared with 210,000 in April 2006; 1.9 – 2 million are expected in 2007 as a whole, assuming that the second half of the year will be better than the first half. (Globes 28.03)
10.6 Israel's Private Consumption Still Growing
The Central Bureau of Statistics reported data on 26 March indicating that private consumption is still growing. It said that credit card purchases by individuals rose by an annualized 11.2% in December 2006-February 2007, after rising by 12.4% in September-November 2006. Credit card purchases by individuals rose by an annualized 10% in January and 17% in February. Annualized growth in credit card purchases in January-February, by sector, was as follows: food and beverages (20% of total purchases) – 4.2%; manufactured goods, such as clothing, footwear, appliances and furniture (18% of total purchases) – 6.9%; services, including plane tickets, accommodations, recreation and entertainment, and government and municipal services (20% of total purchases) – 14.5%; other services, such as fuel, electricity and gas, computers and software, communications, books, advertising, medical services and drugs (42% of total purchases) – 9.6%. (CBS26.03)
In Depth
11.1 Israel: Testing the Speed Limit
Mr. Serhan Cevik, a Vice President at Morgan Stanley (http://www.morganstanley.com) who covers the Middle East and North Africa, believes that the Israeli economy is powering its way to its most robust expansion in years. Even against all sorts of shocks, Israel's economy has kept growing at an above-trend pace in recent years. The latest national accounts confirm the continuation of the country's new growth trend. Real GDP growth accelerated to an annualized rate of 8% in the fourth quarter of 2006, from -0.7% in the third quarter and 5.9% in the first half. In other words, the Israeli economy recovered quickly and strongly from the conflict with Lebanon that led to an abrupt slowdown in the third quarter. Thanks to fiscal consolidation, the private sector has remained the leading engine of economic growth, posting an annualized output increase of 12.8% in the final quarter of last year and an average of 6.4% in the whole year. On the production side, high-technology sectors of the economy achieved an output growth of 23.5% and thereby pushed the overall rate of increase in industrial production from 3.7% in 2005 to 10.5% in 2006. On the expenditure front, both consumer demand and business investment spending leapt upwards – by 4.8% and 6.4%, respectively – and helped to boost real GDP growth to 5.1% last year. This is indeed an astonishing growth performance, especially following a 5.2% increase in the previous year and 4.8% in 2004. No wonder the central bank is once again concerned about the output gap and its inflationary consequences throughout the economy.
The steady decline in unemployment is an indication of the narrowing output gap. According to the Bank of Israel's estimations, the narrowing of the economy's output gap contributed 40bp to the annual rate of inflation last year. In our view, the latest macro figures point to an even narrower output gap and a greater contribution to underlying inflation pressures. Take, for example, the steady decline in unemployment from 10.9% of the civilian labor force in 2003 to 7.7% at the end of last year. This is in fact the lowest unemployment rate in the past ten years and confirms the broadening of economic expansion in Israel. Although the strength of productivity growth and a manageable increase so far in real wages keep unit labor costs under control, low interest rates will continue fuelling domestic demand and eventually lead to more pronounced inflationary pressures, in our view.
Deflation is a result of currency strength and will soon disappear, according to our estimates. The consumer price index posted a monthly drop of 0.3% in February, as expected, due largely to seasonal factors, lower energy prices and the strength of the shekel. On a seasonally adjusted basis, however, the CPI increased by 0.3% and at an annualized rate of 3.3% over three months. Nevertheless, the headline inflation rate still eased from a year-on-year reading of 0.1% in January (and 3.8% last April) to -0.8% last month – well below the central bank's target range. The sudden shift in inflation dynamics is simply a result of the shekel's appreciation, especially against the dollar, which pushed exchange rate-sensitive prices lower. For instance, the housing sector (which represents 22% of the CPI basket) experienced a 5.5% drop in prices because of the currency pass-through effect and thereby made the most significant ‘deflationary' contribution to the headline figure. Of course, this is just technical deflation and should soon normalize, as the shekel's appreciation becomes less influential over pricing decisions.
Deflationary readings are not a justification for more interest rate cuts, in our view. The Bank of Israel lowered short-term interest rates by 150bp in a matter of a few months to 4%, as inflation turned into deflation. But, in effect, the central bank is responding to exchange rate movements that may not be necessarily be affected, at least in the short run, by changes in interest rates. Unfortunately, this makes monetary policy less potent and, at the same time, increases the risk of volatility in the future. Even though we expect the shekel to remain strong (thanks to fundamental improvements) and do not foresee an abrupt increase in inflation, economic developments will gradually bring consumer price inflation within the central bank's target range. This is why we do not believe that deflationary readings resulting from the shekel's appreciation are a justification for further monetary easing. (MS20.03)
11.2 Jordan: 2006 Article IV Consultation and Fourth Post-Program Monitoring Discussions
Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of a combined discussion of the 2006 Article IV consultation with Jordan and the fourth post-program monitoring discussions, the following documents have been released and are included in this package:
Staff Report for the 2006 Article IV Consultation and Fourth Post-Program Monitoring Discussions
EXECUTIVE SUMMARY
Background
The Jordanian economy has performed remarkably well in recent years. Despite negative shocks (including increasing oil prices), growth has been robust (averaging 6 percent during 2001–06), the public debt ratio has continued to fall, inflation has remained low, and reserves have reached an all-time high. This reflects sound monetary and fiscal policies, far-reaching structural reforms—including trade liberalization and improvements in the business environment—and a successful privatization program.
Focus of discussions
This year's discussions focused on policies needed to sustain Jordan's strong economic performance.
• Medium-term external outlook: Despite the large current account deficit in 2006 (16 percent of GDP), the baseline outlook is positive. With appropriate policies in place, the current deficit is expected to narrow substantially over the medium term, reducing reliance on capital inflows.
• Macroeconomic policy mix: With a fixed exchange rate and an open capital account, the burden of adjustment will fall on fiscal policy to maintain macroeconomic stability, reduce the current account deficit, and lower further the public debt-to-GDP ratio. Monetary policy will continue to aim at maintaining the exchange rate peg, which has served Jordan well.
• Structural reforms: Implementing a wide array of fiscal structural measures, including on pensions, sales and income taxes, revenue administration, and public expenditure management is key. Continued improvement in the business environment and proceeding with privatization are also important to maintain high growth and reduce unemployment.
Key staff recommendations
• Maintain the policy reform agenda. This offers the best prospect for sustained strong economic performance. Jordan's current account deficit and reliance on capital inflows remain high, as does its public debt burden. Making further progress on these issues requires both sustained policy reforms and a supportive external and regional environment.
• Legislate a new public debt ceiling of 60 percent of GDP in 2011 as the new fiscal anchor to better insulate the budget from political pressures. This year's budget could have been more ambitious.
• Remove excess liquidity by issuing additional certificates of deposit (CDs). This should help slow domestic credit growth, rein in consumption and imports, and strengthen further the interbank market.
Authorities' views
• Sound economic policies will be continued to sustain Jordan's good economic performance.
• Growth should remain at 6 percent next year—despite risks from the recent equity market downturn, declining profits, and higher interest rates—given continued large investment projects.
• The overall deficit, including grants, will be about 3½ percent of GDP in 2007, mainly to accommodate high-priority spending.
I. BACKGROUND
1. The Jordanian economy has performed remarkably well since 2000. Despite large negative external shocks (increasing oil prices, uncertainties related to the Iraq war, and volatile foreign grants), growth increased to 6 percent during 2001–06, almost double the preceding five-year average, and total factor productivity rose by 2½ percent a year, far above historical norms. The public debt ratio fell sharply. The exchange rate peg to the U.S. dollar anchored inflation, which generally remained in low single digits. Despite a large current account deficit, foreign reserves are now at an all-time high due mainly to a surge in foreign (regional) direct investment.
2. This success is due mainly to far-reaching macroeconomic and structural reforms. Under successive Fund-supported programs, the Jordanian authorities pursued sound fiscal policy; negotiated successfully several debt reschedulings; reduced budget deficits (following the passage of the 2001 Public Debt Law); eased trade barriers substantially, acceded to the World Trade Organization in 2000, and completed several bilateral trade deals (notably the free trade agreement with the U.S.); deregulated extensively food and fuel prices; undertook a successful privatization program; and took measures to improve the business environment.
3. Jordan's performance also reflects a stable and supportive political environment. The cabinet, reshuffled in November 2006, is pursuing its mandate to implement the 10-year National Agenda, which aims at advancing political and economic reforms, and strengthening internal security. And, following a forum held in July, the government has established the “We are All Jordan” Commission to help implement reforms in the economic and political spheres. General elections are scheduled to be held in 2007.
4. Against this background, discussions covered policies needed to sustain Jordan's
strong economic performance. The authorities' response to past Fund advice is summarized in the table below. The specific questions discussed with the authorities arise in the following areas:
• The medium-term external outlook and competitiveness: Will the recent narrowing of the current account deficit continue? Is the level of the peg appropriate? Are there any competitiveness issues?
• The macroeconomic policy mix: What kind of fiscal adjustment is required to maintain macroeconomic stability, reduce the current account deficit, and further lower the public debt-to-GDP ratio? How can monetary policy contribute to maintaining the exchange rate peg and reducing the current account deficit?
• Structural reforms to support medium-term growth and reduce unemployment: What macroeconomic and structural reforms are needed to maintain robust growth and reduce unemployment and poverty? What steps are needed to further improve the business environment?
II. RECENT DEVELOPMENTS
5. With sound policies in place, economic performance remained strong in 2006. Growth of 6¼ percent was recorded during the first three quarters, and is estimated at 6 percent for the year. This reflected buoyant domestic demand (private consumption and investment), in part financed by large private capital inflows. Although average inflation increased to 6.3 percent, this stemmed mainly from fuel and imported food price increases, with core inflation (excluding food and energy) well contained. Unemployment declined to 14 percent, from 15 percent a year earlier. The Amman Stock Exchange index declined sharply in the first half of the year, but has since stabilized. Following interest rate developments in the U.S., Jordan's yield curve flattened over the course of the year.
6. The current account deficit narrowed—albeit to a still-high 16 percent of GDP— and was financed by long-term capital inflows. A broad-based slowdown in import growth and continued strong performance of exports and remittances has been key.
At the same time, private capital inflows rose to record levels on the back of foreign investments in banking, mining, telecommunications, and real estate. As a result, gross usable reserves reached US$6.1 billion at end-2006—more than US$1¼ billion higher than at end-2005—equivalent to about five and a half months of prospective imports.
Following four years of modest depreciation, the real effective exchange rate (REER) appreciated by 6 percent during 2006, a return to levels prevailing in the early part of the decade.
7. The fiscal situation also improved. Stronger revenue performance (income tax and general sales tax receipts), larger-than-expected grants (especially from Saudi Arabia), and the authorities' decision to raise domestic fuel prices (lowering substantially oil subsidies) more than offset higher primary spending on transfers, security, and wage bonuses. Preliminary estimates suggest that the fiscal deficit (including grants) was about 4¼ percent of GDP in 2006 and 7½ percent excluding grants, both lower than in 2005. The deficit was financed comfortably without adding to macroeconomic pressures. A narrowing of the fiscal deficit, together with partial privatization of Jordan Telecom and strong growth, reduced the public debt-to-GDP ratio further, to 73 percent by end-2006, from 83 percent in 2005.
8. Meanwhile, monetary policy supported well the U.S. dollar peg The spread on 3-month JD-denominated CDs issued by the Central Bank of Jordan (CBJ) over the U.S. dollar 3-month T-bill rate has been kept to a 1½–2 percentage point range during the past year. Broad money increased in line with nominal economic activity, with strong private sector credit growth (24 percent year-on-year) broadly offset by reductions in credit to government (privatization receipts) and a large contraction in other items net (bank capital increases). The dollarization ratio has been stable, at about 27 percent of deposits—reflecting continued confidence in the Jordanian dinar (JD).
III. POLICY DISCUSSIONS
A. Macroeconomic Outlook
9. The macroeconomic outlook is positive, with steadily declining inflation and a sustained growth rate of 6 percent
• Under the currency peg, and as the oil and food price shocks work their way through the system, inflation is expected to fall to 5.7 percent next year and then to decline to levels closer to those of the U.S.
• The high growth rates experienced over the last five years—well in excess of what would be expected from factor accumulation—are indicative of a structural shift in trend growth, likely reflecting the impact of Jordan's ongoing reforms, a major step up in foreign direct investment (FDI) and private investment levels, and improving productivity.
• For next year, the authorities expect growth to remain strong given the coming on stream of large investment projects. Staff believes that growth could be slightly lower because of slowing housing and equity markets (wealth effects), declining corporate profits (investment effects), and the delayed effects of higher interest rates.
10. The external outlook is more uncertain, but staff's analysis suggests the risks are limited given recent trends.
• While the current account deficit has been large in the past few years, it has partly reflected a sizable increase in private investment. Foreign investors have ratcheted up operations in Jordan since 2003, boosting private investment (and associated imports) by an estimated 8 percentage points of GDP. But this has also increased substantially Jordan's foreign exchange earning capacity for the coming years.
• The current account is expected to narrow further. The strong export momentum of recent years is likely to continue, reflecting the free trade agreement with the U.S., strong regional demand, and large investments in traditional export sectors. Import growth is projected to stabilize on account of falling import unit prices (a substantial reversal of recent trends) and import volume growth more in line with overall economic activity. Assuming tourism and remittance growth in line with recent norms, the current account deficit would decline steadily to 7½ percent of GDP by 2012.
• The narrowing of the current account deficit will come mainly from higher savings. Investment is expected to decline only modestly and from a high starting level, supporting Jordan's medium-term growth prospects. Savings should increase, however, from 11 percent of GDP in 2006 to about 18 percent in 2012. Public saving increases reflect medium-term fiscal adjustment. Private savings are also expected to increase—as tighter credit conditions, weaker asset prices, and declining fuel and food subsidies put private consumption back on trend.
• External debt dynamics and liquidity ratios do not signal vulnerability. With a falling current account deficit, and continued strong FDI inflows, reserve ratios to imports and short-term debt should remain comfortable, and external debt (mostly concessional) could be halved in five years (to 23 percent of GDP). As discussed in the external debt sustainability analysis (DSA), these baseline projections are robust to several assumed shocks, but are more sensitive to private capital inflows, including regional FDI.
B. Fiscal Policy
11. The authorities intend to base their policies on achieving a public debt-to-GDP ceiling of 60 percent by 2011. They are considering updating the Public Debt Law's existing 80 percent limit, which was instrumental in securing past adjustment. At a minimum, meeting the new target will likely imply overall budget deficits (including grants) not exceeding 3½ percent of GDP a year over the medium term. However, a still-high public debt, large current account deficits, and uncertainties over foreign grants and capital inflows would suggest that an even more ambitious fiscal adjustment is warranted. The fiscal DSA highlights the dependence of debt sustainability on sustained fiscal adjustment.
With the recent oil price decline, the 60 percent target becomes easier to reach, leaving room to adjust, as needed, to exogenous shocks. The medium-term fiscal adjustment entails declines in debt ratios of about 3½ percentage points per year, which appears feasible given falling deficits and assumed strong growth; debt reduction in recent years has on average been far larger.
12. Both sides agreed that medium-term fiscal adjustment should rely primarily on spending measures. With the Jordanian economy well taxed, the authorities indicated that any higher tax revenue should come from further strengthening tax administration and broadening the tax base. Accordingly, the authorities will concentrate their efforts on keeping non-priority current spending constant in real terms, while protecting priority spending. This requires savings on transfers and other current spending, a better targeted social safety net, and improved public financial management.
13. The draft 2007 budget is consistent with the new medium-term debt target. The overall deficit, including grants, is set to improve by about 1 percentage point of GDP, to 3.4 percent. While planned fiscal adjustment could have been more ambitious, the authorities indicated that this was the best they could do given high priority spending needs. (These include large one-off defense and security spending of about 2 percentage points of GDP that is expected to be unwound the following year.) At the same time, the authorities had reiterated their plan to eliminate fuel subsidies in 2007, to be followed by an automatic formula-based fuel price adjustment mechanism to help insulate pricing decisions from political considerations. In addition, they are considering introducing specific inflation indexed excises and full general sales tax (GST) on selected petroleum products that could generate at least 1 percent of GDP a year, although this will not likely take place this year.
14. Despite continued fiscal adjustment, securing appropriate domestic financing will resume its importance over the medium term. Although requirements are expected to remain low next year, net domestic financing will likely average 2¾ percent of GDP on an annual basis over 2008–12. This is due to a marked decline in net foreign financing—linked to an end of Paris Club reschedulings—and completion of the privatization program. The authorities are considering extending the yield curve beyond five years and issuing long-term JD-denominated bonds on regional markets mainly to test the confidence of regional investors in the JD and to avoid squeezing private sector credit. They are also considering issuing Islamic financial instruments (sukuks) for budget financing needs and for mopping up excess liquidity of Islamic banks.
15. The authorities intend to continue with structural fiscal adjustment as a key part
of their reform agenda:
• Tax and expenditure policy measures include broadening the GST base; strengthening the income tax regime; phasing out food subsidies; and proceeding with civil service reform.
• Revenue administration measures are continuing apace, in line with Fund technical assistance recommendations. These include strengthening further the large taxpayer office and setting up medium taxpayer offices. Staff called for accelerating reforms in the area of public financial management, including on strengthening macro-fiscal management, completing work on the treasury single account, modernizing the budget classification, implementing Government Financial Management Information System (GFMIS), and strengthening budget processes.
• Reforming the pension system is essential for its long-term viability. Although the Social Security Corporation has been achieving surpluses of about 1½ percent of GDP, it needs to put its finances on a sustainable footing to ensure that early retirement is actuarially fair, benefits are linked to lifetime contributions, and pensions are indexed to inflation to prevent an erosion of their real value over time. The World Bank is providing assistance in this area.
C. Monetary and Exchange Rate Policy
16. The CBJ stressed its commitment to continued prudent monetary policy, to
maintain the dollar peg and keep inflation low.
• The CBJ and staff consider the existing interest rate spread over U.S. interest rates appropriate, with no pressures evident in the foreign exchange market. International reserves are adequate, covering more than five months of prospective imports.
• With the recent inflation increase reflecting mainly a one-time jump in the price level due to supply shocks, staff and authorities do not see a need for an immediate monetary response. The CBJ stands ready, however, to tighten monetary policy further should inflation show signs of becoming entrenched.
• The CBJ intends to continue to remove excess liquidity through the issuance of CDs. This will help slow domestic credit growth, and contain consumption and imports. It will also help strengthen further the interbank market by reducing reliance on the CBJ's overnight deposit window. The CBJ is also considering increasing the frequency of its CD auctions to help better manage aggregate liquidity conditions in the market.
• The CBJ and the ministry of finance (MOF) will continue to coordinate closely. The government is considering options to retire gradually its debt to the CBJ (incurred in earlier years), including through the issuance of marketable interest-bearing securities. Such an initiative will not only bolster the CBJ's profitability and its operational independence, but also help jumpstart the domestic bond market since 40 percent of government debt is held by the CBJ.
17. Staff agrees with the authorities that the exchange rate peg provides a stable nominal anchor. This requires supportive macroeconomic and structural policies, including bringing inflation in line with that in the U.S. The value of the dinar is appropriate from several perspectives:
• The current account deficit has not been associated with weak export performance, a typical symptom of a misaligned exchange rate—exports have been growing at double digit rates for five years. Market shares in the U.S. have risen substantially, despite tough competition in the apparel industry, and productivity in the manufacturing and textile sectors has increased sharply in recent years.
• There are no signs of foreign exchange pressures, with the CBJ a net buyer of foreign exchange in the past few years, and net foreign assets of the banking system increasing substantially.
• While the REER appreciated modestly in 2006, the equilibrium REER might have appreciated with the recent surge in private capital flows.
• Finally, the dramatic increase in FDI suggests confidence in the economy's ability to generate sufficiently high rates of return in the future, and indicates investors' favorable views on prevailing competitiveness conditions.
D. Financial Sector Policies
Bank indicators remain sound despite the major correction in the equity market. Capital adequacy and liquidity ratios are comfortable; nonperforming loans are low and provisions high; profitability has increased despite narrowing loan margins; and dollarization remains steady.
19. The authorities have made much progress on adopting key FSAP recommendations in the areas of banking regulation and supervision. A prompt corrective action framework and comprehensive corporate governance/risk management guidelines have been published, and off-site surveillance should soon benefit from the installation of a new electronic reporting system. The implementation of Basel II's Second Pillar is progressing well. The latest Anti-Money Laundering/ Combating Financing of Terrorism (AML/CFT) assessment of Jordan revealed a need to improve the overall legislative and institutional framework. As part of the authorities' response to these findings, parliament is expected to pass soon the AML/CFT legislation, prepared with World Bank advice. The Credit Bureau Law is at discussion stage. The CBJ welcomed the prospect of an FSAP update, possibly during the second half of 2007, once readiness for Basel II is complete and payments system reforms are fully implemented.
20. However, rapid private sector credit expansion calls for continued vigilance and strict bank supervision. New forms of lending, such as margin and non-collateralized loans, as well as credit card usage, have grown rapidly over the past two years, and banks may not have the capacity to assess associated risks. And the consequences of banks' increased indirect exposure to a declining stock market could become more visible in 2007. Against this backdrop, the CBJ has improved its staffing to support on- and off-site supervision activities, and has started to enforce a finer classification of credit facilities and associated stricter provisioning rules since June 2006.
E. Investment Climate
21. The authorities are determined to build on Jordan's strong record of attracting
regional investors.
• This will require further improvement in the business environment (the World Bank's latest Doing Business Survey has shown slippages in most areas except trade). Possible reforms here include simplifying procedures for starting and closing a business, and for registering property; improving credit information through a Credit Bureau Law;
increasing labor market flexibility by containing public sector wage increases and easing hiring and firing legislation; and strengthening further basic infrastructure.
• Continued privatization will also help. In this context, the authorities plan to sell stakes in Royal Jordanian Airlines and three electricity generation and distribution companies, as well as to sell in early 2007 the remaining shares in Jordan Telecom.
• The authorities see a greater role for the use of public private partnerships (PPPs) in attracting investment. Potential schemes include projects related to water supply, airports, and railways, among others. They acknowledged that any plans to introduce PPPs should be accompanied by an appropriate legal and institutional framework, and proper accounting and transparent disclosure of fiscal risks.
IV. STAFF APPRAISAL
22. Jordan's economic performance in recent years has been stronger than expected by staff. Despite negative external shocks, growth has increased sharply and inflation has remained low, anchored by the exchange rate peg. Public debt has continued to fall, foreign reserves are at an all-time high, and banks have gathered strength. Although the current account deficit is high, it is narrowing and has been comfortably financed mainly by long-term capital inflows.
23. This success reflects successive rounds of supportive economic policies. Over the past decade, the Jordanian authorities have pursued sound fiscal policy, limited CBJ public credits, maintained the exchange rate peg through prudent monetary policy, lowered trade barriers, deregulated domestic prices, implemented a successful privatization program, and improved the business environment.
24. Sustaining this good economic performance is now the key challenge Jordan faces. Despite its major achievements, Jordan's current account deficit and reliance on capital inflows remain high, as does its public debt burden. And still-high unemployment and poverty also have to be tackled. Making further progress on these issues requires both sustained policy reforms and a supportive external and regional environment.
25. The authorities' policy package appropriately relies primarily on continued fiscal adjustment. This is expected to lower the debt burden further and support the currency peg and low inflation. It should also contribute to a sharp narrowing of external imbalances over the medium term, with the current account deficit falling sharply, and external debt halving, to 23 percent of GDP, by 2012. Further structural reforms are also needed to improve the investment climate, create jobs, and support growth.
26. Staff believes that the introduction of a new binding public debt ceiling— 60 percent of GDP by 2011—will play a critical role. The previous fiscal anchor worked well, guiding successive governments to adopt a series of budgets that helped further ease Jordan's debt burden. To help ensure that the new anchor is similarly successful, the new target should be legislated and accompanied by a medium-term path for the primary balance (excluding grants, given their volatility) in line with the new target. The margin created by the recent oil price declines should be used to adjust to negative external shocks, rather than to make room for additional spending or tax cuts. Also, measures to further develop the domestic debt market would be important to secure adequate financing on reasonable terms over the medium term.
27. Achieving the new debt goals will require spending restraint and ambitious fiscal structural reforms. Initial steps should include the introduction of an automatic fuel price adjustment mechanism—current international fuel prices afford the opportunity to do this without an accompanying price increase—and specific inflation-adjusted excises on selected petroleum product. This fuel price adjustment mechanism should play a key role in preventing the re-emergence of fuel subsidies in case world fuel prices increase in the future.
With Jordan already well taxed, and beyond resisting pressures to cut taxes (e.g., recent parliamentary income tax law proposals), the new debt targets will mainly require keeping current primary expenditure constant in real terms. Given competing demands on expenditure, eliminating fuel subsidies in early 2007, containing non-priority current spending, better targeting the social safety net, and improving public financial management should be priorities. Additional capital spending should also be well prioritized with due consideration to absorptive capacity constraints.
28. The 2007 budget is consistent with the new medium-term fiscal targets, but more ambitious adjustment would have been desirable. Not only would this make reaching the debt target less susceptible to shocks in the outer years, it would likely help with the current account deficit and inflation. It would also set the stage for lower domestic financing needs in the medium term, thereby limiting any potential crowding out of private sector activity. Further adjustment might have been achieved through containing non-priority current and capital spending growth.
29. The dinar is fairly valued and the exchange rate peg should continue to serve
Jordan well as a nominal anchor. The interest rate spread of CBJ CDs (1½–2 percentage point range) relative to the U.S. 3-month T-bill has contributed to maintaining confidence in the peg. But the CBJ needs also to remove remaining excess liquidity through the issuance of additional CDs. This should help slow domestic credit growth over time and further strengthen the interbank market. Staff welcomes the authorities' decision to keep credit and inflation developments under close review—and to react as needed should developments diverge from expectations. Staff also welcomes the joint plan of the CBJ and the MOF to strengthen CBJ's balance sheet.
30. Staff welcomes the authorities' commitment to strict financial sector supervision. A sound banking system will provide a base for sustainable growth in Jordan. Banks are now well capitalized, nonperforming loans have declined and profits remain comfortable. The implementation of FSAP recommendations, including introducing a prompt corrective framework and improved off-site surveillance, is welcome. Staff looks forward to the early passage by parliament of AML/CFT legislation and to an FSAP follow up later this year.
31. The authorities' commitment to continue with PPM is welcome. This reflects the continued close and fruitful cooperation between the authorities and staff.
32. It is recommended that the next Article IV consultation be held on the standard cycle. (IMF28.03)
11.3 Construction Leads Jordan's Economic Growth In 2006
On 1 April, Jordan's Department of Statistics (DoS) released the 2006 national economic figures. In Jordan's economy, the construction sector achieved the highest absolute growth rate last year as it increased by 11.1% and made a 5% contribution to the gross domestic product (GDP) in 2006. This compares to 4.8% in 2005. Overall, Jordan's GDP in 2006 grew by 6.4% at constant prices compared to 7.2% in 2005. The average economic growth between 2000 – 2006 was 5.9%, from a low of 4.2% in 2000 and a high of 8.4% in 2004.
The average GDP per capita has gradually moved up from $1,741 annually in the year 2000 to reach $2,545 in 2006, an increase of 46.2%. The inflation rate was 6.3% in 2006 compared to 3.5% in the previous year and the unemployment rate at 14%, down from 14.8% in 2005.
The manufacturing sector grew by 10.6%, mainly as a result of higher activities in the textile industries and the petroleum industry. The growth in the food industry, the third component, was lower at 3.6%. As such, the share of manufacturing industries in the GDP increased from 17.9% in 2005 to 18.6% in 2006. The sector's contribution in growth accounted for 1.9% of the total 6.4%. The transport and telecommunications sector grew by 6.7% mainly from communications activities (4.9%) and air transport (16.7%). This sector accounted for one percentage point of overall growth.
The wholesale & retail trade, restaurants & hotels sector expanded by 7.3% in 2006 and accounted for 0.7% of GDP growth. The water and electricity sector recorded a growth of 9.2% and contributed 2.2% in the GDP. It also registered a 0.2% in the total growth. Sectors such as domestic services of households and agriculture witnessed slight development recording 3.5% and 0.6% respectively.
The national exports percentage of the GDP increased to 28.9 last year in comparison to 28.5% in 2005, while the country's imports declined from 82.6% in 2005 to 80.7% in 2006. Trade deficit dropped from 48.7% in 2005 to 44.3% in 2006, while the budget's deficit declined from 5.3% to 4.4% in 2006.
The manufacturing sector in 2006 grew by 10.6% in comparison with 2005. The growth is attributed to the sector's main industries' growth including the embroideries industry, which recorded a 45.1% increase in 2006. The exports' figures show an increase in the value of embroidery exports, with 18% in 2006 in comparison with 2005. Oil industries recorded a growth rate of 7.2%. Meanwhile, food industries dropped to 3.6%. (JT02.04)
11.4 Kuwait: Aston Martin Sold To Kuwaiti Investment Companies
The Oxford Business Group revealed that a consortium led by Dave Richards, Dave Singer, Investment Dar and Adeem Investment acquired the sports car manufacturer Aston Martin, ending almost 20 years as part of Ford Motor Company.
Dave Richards is a former British racing champion and the founder and chairman of Prodrive, a motorsport and automotive engineering company. Dave Singer is a US banker in finance and shipping. Richards will become the non-executive chairman of Aston Martin at the end of the month.
The US automotive manufacturer Ford Motor announced in August it was looking to spin off the UK-based automaker, whose cars have been made famous by the James Bond movies. The Aston Martin transaction was valued at $925m. The terms and conditions of the deal were not disclosed but Investment Dar confirmed they had acquired a slightly over 50% stake worth $464.16m while Ford will retain a $77m operating stake in the company. The other three consortium partners will share payment for the remaining $384m.
Investment Dar said the deal was partly financed by international banks, which agreed to a $393m sharia-compliant loan. Investment Dar and Adeem Investment, both sharia-compliant companies, share Efad Holding as a stockholder. Investment Dar, with assets of $3.66b, is one of the largest investment firms in the region, with interests in a variety of sectors, including banking, real estate and logistics. Adeem Investment, with assets worth $1.5b in the hotel, transport and telecom industries, is one of the fastest growing finance companies in Kuwait.
The new owners, who have promised long-term support of Aston Martin, said they expect the 1,800-strong workforce at Aston-Martin's UK plant will grow by 200 within the next few years.
Ford has been struggling recently, with registered losses of $12.7b in 2006 and an operating deficit estimated at $17b until at least 2009. Ford owns a number of luxury brands in addition to Aston Martin, including Jaguar and Land Rover but those units have not made a profit since 2003. Aston Martin was thee only one to turn a profit in the past several years.
The purchase of Aston Martin underlines the growing global clout of Kuwaiti investors. With the second highest capitalization in the region and one of the largest equity markets in the Gulf Cooperation Council, Kuwait's private investment companies are well placed to expand their already lengthy reach. Furthermore, with the price of crude oil remaining high, both local and regional companies have had continued access to additional capital. (OBG26.03)
11.5 Bahrain: Revitalizing the Energy Sector
In mid-March, Bahrain's oil and gas minister, Abdulhussain bin Ali Mirza, announced that four offshore exploration blocks have been put out to bids. Mirza, who is also the chairman of Bahrain's National Oil and Gas Authority (NOGA) told delegates at the 15th Middle East Oil & Gas Show and Conference (MEOS) that the offer was part of a NOGA program, in association with Bahrain Petroleum Company (BAPCO), to attract international oil companies to invest in production and exploration of Bahrain's offshore blocks. The bidding for these blocks, which total 6,652 sq km, is scheduled to close on September 17, following a road show in late March and April that would take officials to London, California and Texas. The contract awards are expected to be announced at the end of October. Both NOGA and BAPCO hope new advances in exploration technology and data assessment will help in the discovery of more oil reserves in Bahrain's territorial waters and extend the life of existing reserves.
In November 2001, Bahrain awarded two blocks off the country's southeastern coast to the Malaysian company Petronas and another to ChevronTexaco. Both companies have since begun to explore their concessions although, to date, no new discoveries of oil in commercial quantities have been reported. Mirza said the government is also pushing ahead with a separate onshore development and production bid to reactivate opportunities in discovered hydrocarbon assets.
BAPCO also announced at MEOS that it had awarded a $33m contract to Kuwait's Burgan Drilling Company. The agreement entailed the provision of two contract rigs and the drilling of 70 wells of varying designs, including vertical and horizontal wells, in Bahrain. Bahrain's energy sector was also boosted by the news that Saudi Aramco resumed full operations of the AB-1 pipeline transporting crude oil from Saudi Arabia to Bahrain after it had been closed for about a month due to unscheduled maintenance work. The pipeline is vital to Bahrain's energy sector as it transports approximately 230,000 barrels of crude per day (bpd) from Saudi Arabia to Bahrain's only refinery.
These recent developments serve to brighten the energy sector's prospects in Bahrain. Following a gradual decline in crude output from 70,000 bpd in the 1970s to a current 37,000 bpd, Bahrain has established a highly successful refining process, processing its own production as well as the much higher quantity of crude that the kingdom receives from Saudi Arabia. Furthermore, Bahrain is planning to invest $1bn on modernizing its refinery, which is the oldest one amongst the Gulf Co-operation Council (GCC) member states.
A key element of the refinery's modernization is the $695m Low Sulphur Diesel Production Project (LSDP), which aims to reduce the current high-sulfur content of BAPCO's diesel pool from an average of 0.65% to .001%. This will enable BAPCO to ensure increased sales in international diesel markets where vehicle exhaust emissions are strictly regulated.
Bahrain's energy sector still has to contend with a number of concerns.
At MEOS, Mirza warned that political instability could affect the region's ability to meet increasing global oil demand. Mirza's comments came as diplomatic tension between Washington and Tehran increased over Iran's nuclear program.
In addition, there is the feeling amongst industry observers that human resources in the sector need to be developed. Samuel Knight, senior specialist of corporate communications at BAPCO, recently told OBG there must be a greater focus on training and development if the sector is to be prepared for the future. Knight said that the employment package in Bahrain's energy sector is not as lucrative as it is in other parts of the Gulf, which could lead to recruitment problems. However, Knight was keen to stress that addressing the concern surrounding human resources has become one of BAPCO's main priorities. (OBG22.03)
The Oxford Business Group reported that on March 21, the Al Ahli Group (AAG) announced its partnership with US-based Marvel Entertainment that will see the comic publisher's characters become part of a new theme park in Dubai. The $1b theme park is due to open its doors in 2011, though AAG has not yet announced where it will be located. When up and running, it will be the first entertainment centre of its kind in the region. According to Mohamed Khammas, AAG's chief executive officer, the concept of family destinations had not yet evolved in the Middle East.
The Al Ali Group's partnership with Marvel Entertainment serves a long pursued quest of creating the ultimate entertainment destination for families and children of the region and the world, a destination where they can live their childhood fantasies and create new memories for the entire family to cherish and remember, he said at a press conference announcing the tie up with Marvel. Khammas said AAG and Marvel had also opened talks on further projects throughout the Middle East region and that AAG was considering creating a separate entity to develop the project and raise money through a listing on the Dubai International Financial Exchange.
The team that will be developing the as yet unnamed theme park will be based in Hollywood California, Orlando in Florida and Dubai during the four-year lead up to the park's opening. The announcement came after two years of steady negotiations and represented a significant achievement for Dubai in its quest to further develop its tourism industry. There had been rumors, strongly denied by all sides, that Disney had also held talks on licensing its range of characters for a theme park in Dubai.
The deal comes at a time when the profile of Marvel's range of characters is at an all time high. Thanks to successful movie spin offs featuring a number of its creations, such as Spiderman, the X-Men and the Incredible Hulk, the company has shifted from being a leading comic book producers to being a major entertainment corporation. Among Marvel's 5000 characters, it is expected that the best known of the range will be featured in the rides and facilities to be offered.
The announcement of the new theme park also marks a step forward in the development of AAG as a major international corporation. Since its foundation 39 years ago, it has developed into a broad-based group with interests in many sectors, ranging from construction and manufacturing to transport and retail. In 2004, it signed on to develop a major mixed use project as part of Dubailand, the government-supported $20b residential, business and entertainment complex being built close to the Dubai airport. AAG's part in the project will be the Dubai Outlet City, which will bring together a shopping complex, a business park, a marketing centre and top end resorts and hotels. (OBG27.03)
11.7 Egypt: When a Prime Minister Makes Monetary Policy
Morgan Stanley's Serhan Cevik (http://www.morganstanley.com) observed that with loose macroeconomic policies, Egypt's consumer price inflation keeps rising. The consumer price index increased at an annual rate of 12.6% in February, up from 12.4% at the end of 2006 and 3.1% in 2005. This is a partly a result of higher food prices and administered price adjustments last year. First, food prices – representing 38% of the CPI – recorded a sharp year-on-year increase from 4.1% in 2005 to 16% by the end of last year. Second, the reduction in energy subsidies raised inflation rates in the fuel-sensitive housing and transportation sectors from 0.2% and 1%, respectively, at the end of 2005 to 7% and 10.4% last December. However, even though these supply shocks have eased in recent months – lowering the rate of increase to 15.7% in food prices and stabilizing it at 10.4% in transportation prices – the headline inflation rate keeps rising, albeit at a slower pace. As we have long argued, despite all the statistical shortcomings of the official price indices, Egypt's inflation problem is not just about one-off developments, but really stems from loose macroeconomic policies that have led to overheating of the economy.
Administrative measures may stabilize inflation, but will not address the underlying problem. The quality of statistics is low in Egypt, making it difficult to do analysis and conduct monetary policy. Realizing this challenge, the Central Agency for Public Mobilization and Statistics and the Central Bank of Egypt are working to expand and improve economic datasets. Until then, of course, we have to work with available figures. Given the high share of food and administered prices in the CPI, base effects may stabilize inflation rates, but the expansionary policy stance – negative real interest rates coupled with a large budget deficit – is the real problem and results in unbalanced growth and inflationary pressures. Against a 940bp increase in the annual rate of inflation since the end of 2005, the central bank tightened its monetary policy stance by just 75bp to 8.75% last year and has left it unchanged so far this year. Likewise, the government has not adjusted incomes policy to contain inflationary pressures and relied on windfalls to lower – only marginally – the budget deficit. Instead, the authorities have introduced administrative measures such as imposing export tariffs on steel and cement and cutting import tariffs on food products. In our view, this approach contradicts the spirit of the reform agenda and does not really address underlying imbalances in the economy.
The Egyptian economy, fuelled by loose policies and abundant liquidity, is growing too fast. All countries aspire to achieve faster growth, but the question of sustainability is as important as the rate of employment and income growth. After all, boom-bust growth cycles lead to underperformance in the long run and hurt the poor more than others. This is exactly the risk the Egyptian economy is facing today. After growing at an annual average of 4.4% in the 1990s, real GDP soared by 6.9% in the last fiscal year and 7.2% in the first quarter of the current fiscal year – the fastest expansion in the last two decades and well above the sustainable rate of growth. No one can deny the benefits of reforms implemented in recent years, but we should not overlook the nature and composition of growth. Supported by petrodollar liquidity and low rates, bank lending to the household sector is growing at an annual rate of 25% (from 4% in 2002) and the real estate sector is experiencing an unprecedented boom, together explaining the surge in consumption and core inflation.
When politicians get involved, monetary policy tends to become less effective. The signs of overheating in the Egyptian economy are clear, as are the reasons behind it. However, even though the central bank acknowledges the need to normalize negative real interest rates, monetary tightening is not easy with the country's prime minister heading the Coordinating Council for Monetary Policy, where politicians have more weight than central bankers. Furthermore, the original sin of fiscal imbalances keeps creating inflationary pressures and limiting the effectiveness of monetary policy. This is why we think that Egypt urgently needs an independent central bank and fiscal consolidation through maintaining primary budget surpluses. (MS28.03)
11.8 Libya: Privatization Possibilities
The Economist Intelligence Unit believes that an announcement of the privatization of Libya's two state-owned mobile telephone companies has raised high hopes – but hard facts on the timing of such a move remain scarce.
The son of Libyan leader Muammar Qaddafi, Saif al-Islam Qaddafi, surprised the Middle east telecoms sector when he announced the imminent privatization of Libya's two state-owned mobile telephone companies at the end of last month. Even more surprising – the unexpected announcement gave almost no details about the proposed move.
Speaking at the inaugural meeting of Libya's newly formed National Council for Economic Development, Mr. Qaddafi said that the mobile companies would go private “within days”, opening the way for the formation of partnerships with foreign operators. However, nothing concerning the announcement has been heard from the Libyan government since.
Like many developing markets, Libya's mobile phone market is growing rapidly. Mobile phone penetration is about 26%, with around 2.3m mobile phone subscribers divided between two brands, Libyana and Al Madar. In principle competition exists between the two companies, following the creation of Libyana in 2004 as a second operator, but both are ultimately owned by the General Post and Telecommunications Company (GPTC), the state-owned telecoms operator run by Muammar Qaddafi's eldest son, and half brother to Saif al-Islam Qaddafi, Dr. Eng. Mohamed al-Qaddafi. The GPTC holds a monopoly over fixed-line and data services, although there is limited competition in the internet services market, where at least seven companies have been licensed. However, state-owned ISP, the Libya Telecom and Technology Company (LTTC) effectively control the sector through its monopoly over international connectivity.
Mohamed al-Qaddafi holds great power over Libyan telecommunications and, in addition to being Chairman of the GPTC, is chairman of both Libyana and LTTC, and the General Secretary to the People's Committee of the General Authority for Information and Telecommunication (GAIT), the regulatory body for the telecoms sector. It is unknown why he did not make this announcement himself. However, divisions are believed to exist within modernizers and conservatives with the regime, and it is by no means certain that Saif al-Islam Qaddafi, a noted social reformer and exponent of economic liberalization who spent a period in exile following a fall-out with his father, has the power to direct telecom policy.
One possibility is that the privatization of Libya's mobile operators will be part of the formation of a new Libyan vehicle for investments in the regional telecoms industry. There were unconfirmed reports last week of that the Libyan Government's investment arm, Libya Africa Portfolio's (CAP) Green Com was seeking a 51% stake in Uganda Telecom (UTL). If true, this may be evidence of an appetite for opportunities in the African telecom sector. So far, however, the sale has been denied by UTL.
Liberalization a distant prospect
The introduction of an element of private ownership in Libya's mobile phone companies must now be a real possibility. Saif al-Islam Qaddafi's announcement is in line with recent statements by the Libyan government proposing, amongst other reforms, the sale of a 51% stake in the Sahara Bank, the country's largest, majority state-owned, commercial bank to a foreign partner. However, it is doubtful that there is the political will to undertake the reform of the telecoms sector to the extent seen in neighboring states such as Egypt and Tunisia, at least in the near future.
Little progress has been made towards loosening the state's grip over an economy riddled with the vested interests of its bureaucracy and those of the Qaddafi family itself, despite the establishment of a team of technocrats to oversee economic reform to coincide with the removal of US sanctions in 2004. Meanwhile, the recent boom in oil revenues has relieved pressure to reform in order to attract foreign investment to fund infrastructural development.
Investment in Libya's telecoms sector is a priority of the regime's current 20 year plan, which includes provision for a $10b investment in telecommunications between 2005 and 2020, and is achieving rapid growth in tele-density in spite of the lack of any competition in the sector. Substantial investment has been made in both of the country's mobile networks, and in recent years 3G infrastructure has been rolled out in partnership with a series of international equipment suppliers such as Alcatel, Siemens, Ericsson, Nokia, ZTE and Huawei.
Libya's oil wealth has also isolated the regime from external influence over the telecoms policy. Although Libya has applied to join the World Trade Organization, there has been little progress since its initial application in 2004 and there is certainly no indication that the country is ready to sign up to the WTO's Agreement on Basic Telecommunications Services.
Should privatization go ahead, Libya's mobile networks will present an interesting investment proposition, due to Libya's high per-capita income by African standards, and the positive outlook for further subscriber growth. However, these advantages must be weighed against the lack of an independent regulatory regime governing the telecoms sector, the lack of checks on the leadership's control over the economy, and Libya's reputation for bureaucratic inertia.
In spite of these risks, there will most likely be plenty of potential investors amongst the major Middle Eastern operators, such as Etisalat, the Mobile Telecommunications Company (MTC) and the aggressively expanding Qtel, as well as African giants such as MTN and Vodacom. Egypt's Orascom Telecom, a major North African player, however, may regard Libya's small population (about 6m) is too small to fit within its strategy of investing in large markets. European mobile operators such as Vodafone, Telefonica, and France Telecom are also active in North Africa, but are likely to require greater transparency and legal stability than Libya can offer. In the meantime, even for those eager to enter the Libyan market, the only possible course. (EIM19.03)
11.9 S&P Raises Cyprus Outlook to Positive
Standard & Poor's Ratings Services said on 29 March that it revised its outlook on the Republic of Cyprus to positive from stable based on the rapid improvement in its fiscal position since 2005. At the same time, the 'A' long-term and the 'A-1' short-term foreign and local currency sovereign credit ratings on Cyprus were affirmed.
"The ratings on Cyprus are supported by its prosperous and resilient economy, short but impressive track record of fiscal consolidation, and the prospect of EMU membership," said Standard & Poor's credit analyst Eileen Zhang. "The ratings are, however, constrained by the sovereign's high, but declining public debt burden and poor external liquidity."
The Cypriot government's goal of early EMU membership has prompted rapid fiscal consolidation since 2005, with the general government deficit falling below 2% of GDP in 2006 and 2007, compared with 4%-6% of GDP in 2001-2003. With unification plans shelved since the referendum in April 2004, the government has been able to devote its energies and focus to macroeconomic policies and to strengthening Cyprus' position within the EU. Gross general government debt is expected to decline to less than 60% of GDP in 2008 from a peak of 70% in 2004, aided both by sizable primary surpluses and by the use of sinking fund assets.
Standard & Poor's expects Cyprus to join the Eurozone in 2008 as planned. Adoption of the euro will ultimately shield Cyprus from exchange rate risks.
"We expect that the Cypriot government's commitment to budgetary consolidation will continue to produce a low fiscal deficit and will further reduce its debt burden, even after the adoption of the euro," said Ms. Zhang. Sustained improvements in the budgetary process (including a medium-term fiscal framework and elimination of expansionary supplementary budgets), more efficient revenue collection, and a lasting decline in transfer payments and defense expenditures could improve the creditworthiness of the republic in the short to medium term. Conversely, any slippage back to the high deficits of the recent past would weaken the government's credit standing. (S&P29.03)
– Israeli Shekel conversions done at a rate of NIS 4.20 = $1.00
– Turkish Lira conversions done at a rate of NTL 1.5 = $1.00
– Cypriot Pound conversions done at a rate of C£ 1.00 = $1.60
– Jordanian Dinar conversions done at a rate of JD 1.00 = $1.41
– UAE Dirham conversions done at a rate of Dh 3.70 = $1.00
– Omani Rial conversions done at a rate of OR 0.385 = $1.00
– Pakistani Rupee conversions done at a rate of Rs 60 = $1.00
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